The Nasdaq ended higher on Friday, driven by megacap shares, as investors awaited quarterly results from some of Wall Street's biggest companies next week.

Tesla shares rose 3.36 percent a day after surging 22 percent on the electric vehicle maker's sales forecast. Amazon, Apple and Microsoft also rose.

"Tesla numbers helped rekindle some optimism of investors that the Magnificent Seven rally is not over," said Brian Jacobsen, chief economist at Annex Wealth Management.

He was referring to the group of interest rate-sensitive technology stocks which have surged on enthusiasm for artificial intelligence. Chip heavyweight Nvidia gained, briefly overtaking Apple as the world's most valuable company based on its shares.

The benchmark 10-year Treasury note yield edged higher as investors awaited US employment data next week for clues on the likely path of Federal Reserve interest rate cuts. Earlier this week, the yield reached a three-month high of 4.26 percent, weighing on the stock market.

The Dow Jones Industrial Average fell 0.61 percent to 42,114. The S&P 500 lost 0.03 percent to 5,808, and the Nasdaq composite gained 0.56 percent, to 18,518.

The Dow was dragged down by banking shares, with Goldman Sachs down 2.27 percent, and it was also hit by a 2.97 percent fall in fast-food chain McDonald's, which has been hit by an E. coli outbreak linked to its hamburgers.

"Banks have rallied as (US presidential candidate Donald) Trump's odds (of winning) increased, so it seems investors are taking some profits," said Michael Rosen, chief investment officer at Angeles Investments.

Regional lender New York Community Bancorp dropped 8.26 percent after reporting its fourth straight quarterly loss, primarily due to its commercial real estate loans.

Continued uncertainty around the US election has made investors cautious.

Equities have been unsettled this week by a rapid rise in yields as bets on rate cuts by the Fed unraveled on expectations of a stronger economic outlook.

Only the Nasdaq closed the week with gains. The tech-heavy index rose 0.16 percent, while the S&P fell 0.96 percent and the Dow sank 2.68 percent. (Reuters)