U.S. equities closed slightly lower on Friday, led by health care, as investors digested Federal Reserve officials' remarks on monetary policy and falling oil prices.
"It looks like the market's consolidating a bit," said Ernie Cecilia, CIO at Bryn Mawr Trust. "We've had an interesting run." "When you look at [the S&P 500], if you go back to Nov. 4, it closed at 2,085. We're now around 2,180."
The Nasdaq composite fell around 0.2 percent after hitting an intraday record of 5,346.8 earlier in the session. The S&P 500 slipped about a quarter of a percent, with health care falling 1.14 percent to lead decliners.
"Signs of short-term exhaustion have arisen in macro-level indices representing stocks, bonds, commodities, and currencies," said Katie Stockton, chief technical strategist at BTIG, in an email. "This tells us to expect a pause in their steep upmoves/downmoves in the next 1-2 weeks as overbought/oversold conditions are absorbed."
The Dow Jones industrial average closed about 35 points lower after opening slightly higher, with Merck contributing the most losses.
"I think we're at a point now where we a transitioning from the reaction to the election to a reaction to the current fundamentals, which is important," said Art Hogan, chief market strategist at Wunderlich Securities. He pointed to higher Treasury yields, the rise in the U.S. dollar and higher oil prices.
U.S. crude oil futures fell 0.59 percent to settle at $45.69 a barrel, after Baker Hughes said U.S. oil rigs increased by 19 to 471. WTI also rose 5.25 percent this week, marking its first positive week in four.
Entering Friday's session, the Dow, S&P 500 and Nasdaq composite were all within half a percent of their previous all-time highs. The Dow had reached a record intraday high of 18,934.05 on Monday — on the back of a sharp post-election rally — while the S&P last set a record high of 2,193.81 on Aug. 15.
"To me, what's strange is the optimism" in the stock market, said Rob Bartenstein, CEO of Kestra Private Wealth Services. "It might be ephemeral, ... but it's driving the market in a way that I haven't seen in a long time."
All three indexes posted weekly gains, with the Nasdaq outperforming, up more than 1.6 percent for the week. The small-cap Russell 2000 posted gains for the 11th straight day, registering its longest win streak since a 12-session advance that lasted from May 20 to June 5, 2003.
Several Fed officials spoke on Friday, including Kansas City Fed President Esther George. In a speech, she said the U.S. economy would benefit from the Federal Reserve raising rates sooner rather than later. Earlier, St. Louis Fed President James Bullard said he is leaning towards supporting a rate hike next month and argued on Friday that the real question now is the Fed's rate path in 2017.