U.S. stocks ended near unchanged on Friday, with the S&P 500 down for a third session, after economic reports showed manufacturing slowing but still in expansion mode at the end of 2014.
The Institute for Supply Management's manufacturing index came in at 55.5 in December, below expectations of a decline to 57.6 from 58.7 in November; separately, 0.3 percent in November, versus a projected 0.3 percent gain.
"The U.S. economy is actually pretty well insulated, this is just investors' worrying more about what could be than what is likely to be. Investors are forgetting that while ISM was weaker than expected, it's still strong and expanding, and the number was pretty consistent with 3 percent economic growth," Kate Warne, investment strategist at Edward Jones, said of the market's turn lower after the data.
"The manufacturing numbers we had today match what we saw in Asia overnight, they were a bit weak, and in thin volume, things can move pretty quickly," JJ Kinahan, chief market strategist at TD Ameritrade, said of Friday's shift from sharp gains to losses.
Shares of Bed Bath & Beyond rose after Canaccord Genuity upgraded the retailer to buy from hold.
The Chicago Board Options Exchange Volatility Index, a measure of investor uncertainty, dropped 7.3 percent to 17.79 after hitting a two-week high on Wednesday.
"The VIX had been up every day this week, and was briefly over 20 this morning; the market is striking a note of caution as we head into a more regular week," Kinahan said.
Major U.S. Indexes
Scaling back from a 128-point surge, the Dow Jones Industrial Average fell as much as 91 points, before ending at 17,832.99, up 9.92 points, or 0.1 percent.
The fell nearly a point to 2,058.20, with consumer discretionary the greatest laggard and utilities faring the best of its 10 main industry groups.
The Nasdaq shed 9.24 points, or 0.2 percent, to 4,726.81.
Volume was light throughout the session with many traders taking a long weekend after the New Year's Day holiday.
For every seven shares falling, more than eight rose on the New York Stock Exchange, where nearly 646 million shares traded. Composite volume surpassed 2.7 billion.
The U.S. dollar rose to a nine-year high against the currencies of major U.S. trading partners; the yield on the 10-year Treasury note used to determine mortgage rates and other consumer loans fell 5 basis points to 2.1151 percent.
After falling to $52.03, its lowest since May 1, 2009, crude-oil futures for February delivery shed 58 cents, or 1.1 percent, to $52.69 a barrel; gold for February rose $2.10, or 0.2 percent, to $1,186.20 an ounce.
"By and large, what happens today and Monday could set the tone for the first quarter. I expect the January effect to take hold, where small and mid-cap stocks outperform," Peter Cardillo, chief market economist, Rockwell Global Capital, said.
On Wednesday, stocks finished sharply lower, but ended December with a healthy advance for the year and fourth quarter.
