Stocks closed mostly higher on Friday as investors digested commentary from key Federal Reserve officials while parsing through strong bank earnings and U.S. economic data.
The Dow Jones industrial average rose more than 150 points before closing about 40 points higher, with Goldman Sachs contributing the most gains. The S&P 500 ended just above breakeven, with information technology and financials leading advancers. The Nasdaq composite barely closed above the flatline, as the iShares Nasdaq Biotechnology ETF (IBB) fell more than 1.8 percent.
Traders had expected further buying ahead of the close, which didn't materialized.
Stock investors were taken for a choppy ride this week, with the Dow and S&P alternating between positive and negative sessions. The three major indexes fell this week.
Dow (blue), S&P (green) and Nasdaq (yellow) this weekSource: FactSet
"I think some of this volatility has been because the Fed is so data dependent, and that has led somewhat to this risk-on-risk-off market," said Ed Crotty, chief investment officer at Davidson Investment Advisors. He also said that, while many investors are expecting the Fed to move in December, the Fed could back off. "If the data weakens, who knows? The Fed has talked tough before and then backed off."
Fed Chair Janet Yellen said the Fed might want to let inflation run hotter for a while. She pointed out that the economy has seen an unusual tendency of weak demand against strong supply, making it reasonable "to ask whether it might be possible to reverse these adverse supply-side effects by temporarily running a 'high-pressure economy,' with robust aggregate demand and a tight labor market."
"I think the market is interpreting this as a possibility that the Fed may not raise rates in December. I don't buy it, but I think that's how the market is interpreting it," said Peter Cardillo, chief market economist at First Standard Financial.
In afternoon ET, New York Fed President William Dudley said "I would expect this year" for the Fed to raise rates, according to Dow Jones. The dollar hit its highest level of the day against a basket of currencies following Dudley's remarks.
Earlier on Friday, Boston Fed President Eric Rosengren spoke with CNBC saying his views haven't changed, but economic conditions have. He said interest rates should go up because the economy was close to reaching full employment and its 2 percent inflation target.