U.S. equities closed lower on Friday as investors digested economic data and key corporate earnings, but ended April with strong monthly gains.
The Dow Jones industrial average slipped about 40 points, with Intel and Goldman Sachs contributing the most losses. The S&P 500 fell 0.2 percent, with financials and telecommunications leading decliners. The Nasdaq composite hit a fresh record high before closing marginally lower.
That said, the three major indexes posted a monthly advance of about 1 percent. The S&P and the Dow posted their fifth positive month in six, while the Nasdaq recorded its sixth straight monthly gain.
A large portion of those gains came this week. Stocks posted sharp rallies on Monday and Tuesday as corporate earnings season continued to reveal strong performances from some of the top companies in the world.
Major indexes this month
"It seems like the earnings and the reduced anxiety over the policy agenda are driving the markets this week," Michael Arone, chief investment strategist at State Street Global Advisors.
About 190 S&P components reported this week. Here are some of most recent results:
- General Motors: earnings per share of $1.70 on sales of $41.2 billion, versus $1.46 per share and $40.75 billion expected by Thomson One analysts' consensus.
- Amazon: earnings per share of $1.48 on sales of $35.7 billion, versus a Thomson One consensus of $1.12 earnings per share on sales of $35.3 billion.
- Alphabet: earnings per share of $7.73 on revenue of $24.75 billion, versus a Thomson One estimate of $7.39 earnings per share on sales of $24.22 billion.
"I think this earnings cycle is doing a good job of justifying these valuations," said David Schiegoleit, managing director of investments at U.S Bank Private Client Reserve.
Friday was also a big day for economic data.
The U.S economy grew at a rate of 0.7 percent in the first quarter, the Commerce Department said. Economists polled by Reuters expected growth of 1.2 percent.
But the latest CNBC/Moody's Analytics survey tracked economic growth at 0.8 percent and the Atlanta Federal Reserve's GDPNow tracked GDP at a 0.2 percent growth rate.
"While a bit disappointing, this number fits in with the seasonal pattern that we have seen over the past few years, where Q1 has tended to be weak," said Sameer Samana, global quantitative strategist at Wells Fargo Investment Institute. "But there was some hope that the recent jump in consumer and business confidence would translate into better growth."
Treasury yields hovered around breakeven after the GDP data release. As of 3:09 p.m. ET, the benchmark 10-year yield traded at 2.27 percent, while the short-term two-year note yield hovered around 1.27 percent.
"Economic data is being overshadowed by earnings and the fluidity of economic policy," said said State Street's Arone. "I think the market was already expecting the Q1 number to be pretty low so [investors] discounted that."
Other economic data released Friday included the Chicago PMI, which unexpectedly rose, and the April read on consumer sentiment inched higher.
Meanwhile, investors kept on mulling over the White House's outline for its vision of tax reform, The proposal slashes the corporate tax rate to 15 percent from 35 percent.
The White House added there will be a "one-time tax" on the trillions of dollars held by corporations overseas. However, Treasury Secretary Steven Mnuchin said the rate for that tax has yet to be determined.
"At the end of the day, when you think about where this thing can go, you need to figure out where you're getting the money to fund this," said Tom Siomades, head of Hartford Funds Investment Consulting Group. "The government is going to run out of money if we give everyone a tax cut. That's a given."
Geopolitical tensions remained in traders' minds as U.S. Secretary of State Rex Tillerson urged the United Nations to impose new sanctions against North Korea.
"We must work together to adopt a new approach and impose increased diplomatic and economic pressures on the North Korean regime," Tillerson said.
"There are a lot of competing forces in the market, ... and we're seeing a result where everything is balancing out," said U.S Bank's Schiegoleit.
The Dow Jones industrial average fell 40.82 points, or 0.19 percent, to close at 20,940.20, with Intel leading decliners and Chevron the top advancer.
The S&P 500 declined 4.57 points, or 0.19 percent, to end at 2,384.20, with telecommunications leading eight sectors lower and information technology the biggest risers.
The Nasdaq closed 1.33 points lower, or 0.02 percent, at 6,047.61.
About nine stocks declined for every five advancers at the New York Stock Exchange, with an exchange volume of 1.02 billion and a composite volume of 3.702 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 10.7.