U.S. stocks closed mixed Friday, pressured by a plunge in biotechs, as investors digested Nike earnings and Fed Chair Janet Yellen's remarks.
The Nasdaq composite closed down 1 percent after falling more than 1.5 percent in afternoon trade, pressured by decline of nearly 5 percent in the iShares Nasdaq Biotechnology ETF (IBB).
IBB had its worst day since April 2014, falling in record trade volume to below its closing low from the Aug. 24 "flash crash." The index closed in bear market territory, or more than 20 percent below its 52-week high. Forty-five percent of the Nasdaq 100 also closed in bear market territory.
Apple closed down 0.2 percent on the day but posted a 1.12 percent gain for the week.
"Often folks aren't eager to take on risk over the weekend," said Michael Arone of State Street Global Advisors. "Biotech — I think this is a little bit of an overreaction in a market where growth is scarce, valuations that are reasonably valued."
IBB had its worst day in 2015 on Monday after a tweet from Hillary Clinton raised concerns about "price gouging."
Armored Wolf Managing Director Bradd Kern is short IBB and said "further biotech downside is inevitable" based on expectations that more than 65 percent of the fund names will lose money in 2016.
"Biotech has attracted a lot of performance-chasing investors over the last couple of years, both on the retail and institutional side," he said. "Retail money has flooded into the ETF, and institutional investors have talked themselves into overweight positions without any consideration of fundamental investing principles, namely valuation."
The S&P 500 closed 0.05 percent lower as a 2.70 percent decline in health care more than offset a 1.45 percent gain in financials. The regional banking stock index also gained 1 percent.
The dollar index hit its highest intraday level since Aug. 19 before trimming gains.
The blue chip index closed 113 points higher, with Nike jumping 9 percent to contribute about 66 points. Earlier, the index gained as much as 263.91 points, or more than 1.5 percent.
Nike reported earnings after the close Thursday that beat on both the top and bottom line, higher prices and strength in the China market.
"I think the great numbers from the Chinese business certainly help, help underscore that growth in China is not collapsing, that the consumer side is doing OK," said David Lefkowitz, senior equity strategist at UBS.
Stocks opened higher and tried to hold gains after three straight days of losses.
"Obviously Yellen's comments last night put us back on track for a rate hike this year so that's positive for the market," said Peter Cardillo, chief market economist at Rockwell Global Capital.
Yellen said in a speech after the close Thursday that she personally anticipates a hike this year.
"I think it gave a lot of people confidence that they didn't have to worry about the global condition, given the volatility in the last couple of days," said Alan Rechtschaffen, financial advisor and senior vice president at UBS Wealth Management Americas.
"She's a consensus builder. If she's out there saying it she feels she has consensus. Although it's her personal conviction she's a strong believer in not going against the flow," he said.
The Dow remained in correction territory, or more than 10 percent away from its 52-week high. The Nasdaq also fell back into correction mode, while the S&P 500 was about 9.5 percent away from its 52-week high.
All three major averages are negative for 2015 and posted weekly losses.
"When you're looking at a market that's healing sometimes you don't want to see it go up right away," said Quincy Krosby, market strategist at Prudential Financial. She noted that a sharp jump after a few days of declines might be viewed as an unsustainable "dead cat bounce" and create "worry we go down again."
"The earnings season is absolutely critical for the direction of the market," she said.
Stocks closed well off their lows Thursday, with the Nasdaq and S&P 500 holding out of correction territory, or remaining within 10 percent of their 52-week highs.
"From a technical perspective we managed to hold the lower range of the trading range (Thursday)," Cardillo said, noting some "early window dressing" and short covering as September and the third quarter come to an end next Wednesday.