The stock benchmarks closed on Friday as rising COVID-19 cases cast doubt on the economic recovery, which was partially offset by advances in vaccines.
The Treasury Department's decision to phase out some Federal Reserve emergency programs was viewed as modestly negative for markets, according to analysts.
What did the main benchmarks do?
The Dow Jones Industrial Average DJIA fell 219.75 points, or 0.8%, to close at 29,263.48.
The S&P 500 SPX fell 24.33 points, or 0.7%, to 3,557.54.
The Nasdaq Composite Index COMP reversed early gains and closed at 11,854.97, down 49.74 points, or 0.4%.
The shares made gains in a troubled trading session on Thursday. For the week:
The Dow was down 0.7%.
The S&P 500 fell 0.8%.
The Nasdaq gained 0.2%.
The Small Cap Russell 2000 Index
What drove the market?
After a week of new coronavirus restrictions moving stock investors back to old trends of buying large capitalization stocks and technology, the market on Friday focused on an apparent rift between the Treasury Department and the Federal Reserve as another potential source of friction .
Late Thursday, Treasury Secretary Steven Mnuchin said he would not approve the renewal of several emergency loan programs put in place at the Fed during the worst days of this year due to the financial turmoil caused by the pandemic.
The Fed replied that it "would prefer if the full range of emergency facilities put in place during the coronavirus pandemic continued to play their vital role as a setback to our still strained and fragile economy".
On Friday, Mnuchin told CNBC that the intent to pull the plug on funding is to return the funds to stimulus efforts, downplaying the apparent gap.
“This is not a political issue. That is very easy. Let's reuse $ 500 billion, ”Mnuchin said. He added, "Markets should feel very comfortable that we still have enough capacity," indicating that $ 750 billion is available to help markets should problems recur.
Mnuchin said he was legally required to return the unused funds to Congress, which he urged to fund small businesses and workers.
In a separate interview on CNBC Friday, Charles Evans, president of the US Federal Reserve in Chicago, described the Treasury Department as "disappointing" when it ended the Fed's emergency funding.
"Our facilities have been very helpful – they play an important role when markets are in a challenging situation," Evans told CNBC.
The Treasury Department's move has made markets "nervous," said Andrew Smith, chief investment strategist at Delos Capital Advisors in Dallas.
A well-known trifecta of headwinds is still on the market, Smith said in an interview: election uncertainty, tax assistance issues, and logistics for a vaccine launch.
"The markets are trading Rangebound so in the second we get clarity that tailwind can move the market up," said Smith. As a result, Smith is aiming for stronger growth with a heavy cyclical rotation and likely more inflation early next year than many investors expect.
Have to know: What's next for the markets after Treasury Secretary Steven Mnuchin pulled the $ 455 billion plug?
In a research note, Gregory Daco, chief US economist at Oxford Economics, said that the Fed's emergency credit facilities "have been underutilized, but their existence has been instrumental in providing credible protection against financial stress".
Read: The S&P 500 could hit 4,500 by the end of 2021, JPMorgan analysts predict
"Given the worsening Covid-19 crisis and the slowdown in activity without financial aid, the decision to reduce the Fed's firepower could unsettle markets and exacerbate economic stress," he said.
Meanwhile, trading was mixed over the week as investors weighed optimism about progress in developing COVID-19 vaccines against a continued surge in new infections.
"The stresses from COVID are hitting medical systems in the Midwest and it is almost certain that mobility will and will likely continue to decline," said Boris Schlossberg, managing director of BK Asset Management, in a note.
"This will have a positive impact on digital retail, but it could be the killer of many small to medium-sized brick and mortar stores and likely create more contractive ripples in the economy in the fourth quarter," he said.
However, markets have so far been revitalized as drug makers made rapid strides towards a vaccine, he said.
On Friday it announced that it will seek US regulatory approval for the vaccine it was developed with BioNTech SE
This has been shown to be 95% effective in a clinical study. Moderna Inc.
Earlier this week announced that its vaccine candidate was more than 94% effective in one study.
Which companies were in focus?
Shares of Gilead Sciences Inc.
fell 0.9% after a World Health Organization panel recommended against doctors using the drug remdesivir to treat coronavirus patients.
Shares of Workday Inc.
lost 9.3% after the cloud software company posted strong sales and sustained earnings growth in the third quarter.
Shares in the software security company McAfee Inc.
lost 3.5% after a balanced third quarter on revenue of $ 728 million and delivered its first results since returning to the public markets last month.
Foot Locker Inc.
The stock closed nearly 5% lower after the athletic footwear and accessories seller saw a surprising surge in sales and profits in the same store that was well above expectations.
Shares of Nike Inc.
After the sportswear and accessories company announced it would increase its quarterly dividend by 12%. Equities gained 0.8%.
Butterfly Network Inc. said Friday it had agreed to merge with the special purpose vehicle Longview Acquisition Corp.
in a business valued at $ 1.5 billion. Longview shares closed 26.8% higher.
Shares of Sotera Health Co.
closed 9.1% higher on the day after the IPO.
How have other markets developed?
The Europe-wide Stoxx 600 Index
closed 0.5% and added 1.2% for the week; and the UK FTSE 100 Index
rose 0.3% on the day and posted a weekly increase of 0.6%.
In China, the Shanghai Composite Index
posted a 0.4% gain and 2% up for the week during the CSI 300
ended the session 0.3% up and up 1.8% for the week.
Japan's Nikkei 225
ended up losing 0.4% but marked a weekly gain of 0.6%.
The yield on the 10 year Treasury bill
was practically unchanged at 0.833% as investors avoid riskier assets. Returns and prices move in opposite directions.
Crude oil futures
gained 1%, or 41 cents, to trade at $ 42.15 a barrel on the New York Mercantile Exchange as traders hoped for an economic rebound.
was up 0.6% or $ 10.90 to hit $ 1,872.40 an ounce but was higher for the week.
Read on: American households could lose $ 226 billion. It could be on Wall Street to get Washington to act