Apple, Amazon knock S&P 500, Nasdaq off record peak; Caterpillar lifts Dow

The S&P 500 and the Nasdaq indexes dropped from their record highs on Friday after dismal results from mega-cap firms Apple and Amazon.com, while gains in Chevron and Caterpillar helped the blue-chip Dow outperform.

Market participants have been closely watching how corporate America navigates through these challenges along with concerns about rising inflation, after largely upbeat earnings reports so far helped investors look past a mixed batch of macro-economic data.

Apple slipped 3.7% after the iPhone maker warned the impact of supply chain disruptions will be even worse during the current holiday sales quarter.

Amazon.com Inc dropped 3.7% as it forecast downbeat holiday-quarter sales amid labor shortages.

"The reason Apple and Amazon is key to watch is only because of their weightage which will lead to some weakness in the Nasdaq but it is definitely not creating any huge cloud over the market regarding strong earnings," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Chevron posts highest profit in 8 years on surging oil, gas prices

Starbucks Corp fell 7.3% after the coffee chain said it expects fiscal 2022 operating margin to be below its long-term target due to inflation and investments.

Data showed US consumer spending increased solidly in September, but was partly flattered by higher prices as inflation remained hot.

The report came ahead of the Federal Reserve's policy meeting next week, where it is expected to announce the start of its tapering of monthly bond purchases.

Meanwhile, US President Joe Biden was dealt a setback on Thursday as the House of Representatives abandoned plans for a vote on an infrastructure bill with progressives seeking more time to consider his call for a separate $1.75 trillion plan for social initiatives.

"Some actual concrete progress on the US spending bills instead of empty rhetoric could give a pleasant boost to markets in the end of the week," said Jeffrey Halley, senior market analyst, Asia Pacific, OANDA.

At 9:57 a.m. ET, the Dow Jones Industrial Average was up 39.49 points, or 0.11%, at 35,769.97, the S&P 500 was down 8.95 points, or 0.19%, at 4,587.47, and the Nasdaq Composite was down 66.71 points, or 0.43%, at 15,381.41.

Seven of the 11 major S&P sectors declined in early trading. Energy shares outperformed after oil majors Chevron Corp and Exxon Mobil posted strong quarterly profits on soaring oil and gas prices.

Their shares rose 1.3% and 0.9% respectively.

Analysts expect profits for S&P 500 companies to grow 38.6% year-on-year in the third quarter, up from an expected 29.4% rise at the start of the earnings season, according to data from Refinitiv.

Caterpillar Inc added 1.2% to provide the biggest boost to the Dow after brokerages raised their price targets on the construction and mining equipment maker's stock.

AbbVie Inc gained 3.8% as the US drugmaker raised its 2021 adjusted profit forecast for the third time this year.

Declining issues outnumbered advancers for a 1.17-to-1 ratio on the NYSE and for a 1.02-to-1 ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and one new low, while the Nasdaq recorded 60 new highs and 23 new lows.