U.S. stocks closed mostly flat on Friday, with financials falling around 1 percent, as investors braced themselves for a key constitutional referendum in Italy while digesting a stronger-than-expected jobs report.
The Dow Jones industrial average fell about 20 points in choppy trade, with Caterpillar and Goldman Sachs contributing the most losses. The S&P 500 ended around the flatline, with financials leading decliners. The Nasdaq composite also closed around breakeven.
The Italian referendum is scheduled for Sunday. With this plebiscite, Italian Prime Minister Matteo Renzi wants to change the constitution so that the executive branch needs approval only from parliament's lower house in order to pass laws. Renzi thinks this change is so important to turn around Italy's lackluster economy that he has vowed to resign if the referendum is defeated.
"What we're seeing here is a cautious market because of the Italian referendum," said Peter Cardillo, chief market economist at First Standard Financial. "If Renzi resigns, that could bring political uncertainty, ... and that could bring an attack on the euro."
The European common currency traded flat against the dollar, near $1.066. The greenback, meanwhile, traded about 0.3 percent lower against a basket of currencies, near 100.7.
"If you look at the bond yields for the Italian bond yields, you can see that they have been rising for some time and the spread between the German and Italian bonds has also raised many eyebrows. The main concern is that if the current prime minister loses the referendum, he will have to resign (he has promised this) and the five star party (anti-euro movement) could create more political instability," said Naeem Aslam, chief market analyst at Think Markets, in a note.
European equities were under pressure on Friday, with the pan-European Stoxx 600 index falling 0.44 percent and the German Dax sliding 0.2 percent.