Major indexes post 1st weekly drop since August
"Right now there is going to be a lot of misplaced angst over the whole debt-ceiling argument. It's political brinkmanship, a sequel that has the same ending time after time; there will be a rash of negative headlines and people losing their tempers. It's going to create some choppiness in the market between here and October," said Matthew Kaufler, portfolio manager at Federated Investors.
One of five Dow components on the rise, Nike Inc. jumped 4.7 percent after the athletic-apparel seller reported fiscal first-quarter profit that beat expectations. J.C. Penney Co. fell 13 percent after the retailer started selling 84 million shares.
Market uncertainty could be amplified with third-quarter earnings, "and the next 45 days or so will be fairly choppy," said Kaufler, who believes some sectors will fare better than others.
"There is a growing chorus that says consumers are shifting their disposable income towards buying high-ticket items like cars, homes and boats, and away from apparel, so stocks associated are going to benefit or lose, respectively," he added.
The Dow Jones industrial average retreated 70.06 points, or 0.5 percent, to end at 15,258.24, with Cisco Systems Inc. leading declines. The blue-chip index tallied a 1.3 percent weekly decline.
The S&P 500 index retreated 6.92 points, or 0.4 percent, to 1,691.75. Down five of its last six sessions, with S&P 500 lost 1.1 percent for the week.
"If you believe as I do that ... this government shutdown issue will be resolved before, on, or a little after the cutoff date, you may want to consider nibbling on the long side if the S&P 500 goes down to the 1,670 area. Keep a mental stop on a clear break of 1,650," Elliot Spar, market strategist at Stifel Nicolaus & Co., said in emailed commentary.
"On a resolution, if the S&P trades back to 1,730-plus, I would be a profit-taker and a hedger," Spar added.
The S&P 500 rose to a record on Sept. 18 after the Federal Reserve unexpectedly held off from cutting its $85 billion in monthly bond purchases. Fed Bank of Chicago President Charles Evans on Friday said additional evidence of economic growth is needed before the Fed can begin tapering its monetary stimulus.
"Wall Street was its own worst enemy there. There was absolutely no commitment to September, and for whatever reason the crowd decided that was when it was going to begin," said Kaufler of market expectations that the Fed would start curbing its asset purchases this month.
Posting a fourth week of gains, the Nasdaq composite fell 5.83 points, or 0.2 percent, to 3,781.59 on Friday, a level that has it up 0.2 percent on the week.
Gold prices rose $15.10, or 1.1 percent, to $1,339.20 an ounce, gaining 0.5 percent for the week; crude futures for November delivery slid to $102.87 a barrel, down 16 cents, or 0.2 percent.
Equities have dropped this week on worries that Congress would not manage to pass a budget before Monday's deadline, which would translate into a government shutdown. Three days ahead of federal spending authority expiring, the Senate approved a bill to avoid a government shutdown, but the House now has to approve the legislation.
The nation is on track to hit its borrowing ceiling on Oct. 17.
At a news conference Friday afternoon, President Barack Obama urged Congress to avert a government shutdown, saying the threat of the possible scenario is damaging the economy.
"Washington observers believe Congress will reach a compromise to continue funding the government for a couple more months, but it may leave the government dangling for a couple of days past the Monday midnight deadline. Consequently, we expect the stock market to remain volatile for the next few days," Fred Dickson, chief market strategist at Davidson Cos., said in emailed commentary.
On Friday, the Thomson Reuters/University of Michigan's final September read on consumer sentiment fell to 77.5 from 82.1 in August, with economic data continuing to yield little reaction from a market singularly fixated on the ongoing partisan brinkmanship among U.S. lawmakers.
Ahead of Friday's open, stock-index futures held losses as data showed consumer spending rising for a fourth month in August, up 0.3 percent after an upwardly revised 0.2 percent the prior month.