S&P 500 stock index falls on concerns over interest rates, trade policy

Yet recent jitters regarding global trade tensions and rising interest rates, which have weighed U.S. stocks this week, persisted.

The U.S. benchmark S&P 500 stock index edged lower on Friday as strong earnings from Procter & Gamble Co were offset by ongoing concerns about rising interest rates and tensions over trade policy denting economic growth.

Shares of Procter & Gamble jumped 8.8 per cent after the consumer goods company reported a surprise rise in first-quarter sales. The climb in Procter & Gamble shares lifted the Dow and helped advance the S&P 500 consumer staples index 2.3 per cent.

The consumer staples sector, which has underperformed the broader S&P 500 this year, was set for its biggest daily percentage gain since August 2015.

Yet recent jitters regarding global trade tensions and rising interest rates, which have weighed U.S. stocks this week, persisted.

The S&P 500 index closed below its 200-day moving average, a key statistical indicator of long-term price trends. Defensive sectors - utilities and real estate in addition to consumer staples - led the S&P in percentage gains, signalling caution among investors.

Trade policy worries weighed on shares of Honeywell International Inc, which erased early gains to end 1.1 per cent lower after the industrial conglomerate said it was seeing slower growth in China and that tariffs would potentially cost it "hundreds of millions" of dollars in 2019.

U.S. home sales fell in September by the most in over two years as the housing market continued to struggle despite strength across the broader economy. Home sales have now fallen for six straight months, and rising mortgage rates are expected to slow demand.

"There are still concerns you can see in the market regarding whether or not higher interest rates are going to weaken growth," said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

As a result, Krosby said, investors will be looking specifically for strong sales, not just profits, as the earnings season progresses.

So far, 61.9 per cent of S&P 500 companies have reported revenue above analyst expectations, below the 73 per cent average over the past four quarters, according to I/B/E/S data from Refinitiv.

"What we need to see to get investors back into the market is stronger revenue growth," she said.

The Dow Jones Industrial Average rose 64.89 points, or 0.26 per cent, to 25,444.34, the S&P 500 lost 1 point, or 0.04 per cent, to 2,767.78 and the Nasdaq Composite dropped 36.11 points, or 0.48 per cent, to 7,449.03.

For the week, the S&P gained 0.02 per cent, the Dow rose 0.4 per cent and the Nasdaq fell 0.6 per cent.

Shares of PayPal Holdings Inc climbed 9.4 per cent, their highest one-day percentage gain in two years after the payments company beat quarterly profit estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 2.25-to-1 ratio favoured decliners.

The S&P 500 posted eight new 52-week highs and 38 new lows; the Nasdaq Composite recorded 12 new highs and 214 new lows.

Volume on U.S. exchanges was 7.59 billion shares, compared to the 7.8 billion average over the last 20 trading days.

(With inputs from agencies.)