By Shreyashi Sanyal and Devik Jain
Oct 22 (Reuters) - The Dow and S&P 500 reversed course to trade lower on Friday, while the Nasdaq fell more than 1% after comments on stimulus tapering from Federal Reserve Chair Jerome Powell spooked markets trading at record levels.
The Dow and the S&P 500 had hit record highs earlier in the session on positive earnings from American Express, before Powell said that the U.S. central bank is "on track" to begin reducing its purchases of assets.
"Every time he (Powell) has been talking about tapering so far, markets haven't been bothered by it, but now at record highs investors tend to be just a little bit more sensitive to such news," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.
The benchmark S&P 500 index .SPX is still set for its third straight week of gains, rising about 1.4% this week.
Seven of the 11 major S&P 500 sector indexes were still higher by early afternoon, while the communication services sector .SPLRCL fell over 2% as it was hit by a slump in social media giants.
Facebook Inc FB.O fell 5.7% and Twitter Inc TWTR.N lost 4.4% after Snap Inc SNAP.N said privacy changes by Apple Inc AAPL.O on iOS devices hurt the company's ability to target and measure its digital advertising.
Snap plummeted 25.3% on the news and cast doubts over quarterly reports next week from Facebook and Twitter, social media firms that rely heavily on advertising revenue.
"That's going to change things for the whole industry but they're (Big Tech) going to adapt just fine," said Todd Lowenstein, chief equity strategist of The Private Bank at Union Bank.
"Right now investors don't like uncertainty. When you don't have a line of sight on things it causes volatility, and investors to question some of the investment around some of these companies."
American Express Co AXP.N jumped 4.9%, the biggest boost to the Dow Jones Industrial Average .DJI, as it beat profit estimates for the fourth straight quarter.
Intel Corp INTC.O tumbled 11.2% as it missed third-quarter sales expectations, while its chief executive officer pointed to shortages of chips holding back sales of its flagship processors.
Supply chain worries, inflationary pressures and labor shortages have been at the forefront of the third-quarter earnings season.
Analysts expect S&P 500 earnings to rise 34.8% year-on-year, up from expectations of a 31.9% at the beginning of the week, according to data from Refinitiv.
At 11:59 a.m. ET, the Dow Jones Industrial Average .DJI was down 19.18 points, or 0.05%, at 35,583.90, the S&P 500 .SPX was down 17.70 points, or 0.39%, at 4,532.08 and the Nasdaq Composite .IXIC was down 159.06 points, or 1.05%, at 15,056.64.
Data showed U.S. business activity accelerated in October, as COVID-19 infections subsided, though labor and raw material shortages held back manufacturing.
Declining issues outnumbered advancers for a 1.22-to-1 ratio on the NYSE and for a 2.07-to-1 ratio on the Nasdaq.
The S&P index recorded 80 new 52-week highs and no new low, while the Nasdaq recorded 116 new highs and 109 new lows.
(Reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Arun Koyyur, Sriraj Kalluvila and Shounak Dasgupta)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.