US markets closed lower on Friday, with investors concerned by rising oil prices, and also looking ahead to a Federal Reserve interest rate policy meeting.

The Nasdaq Composite posted a slim loss a day after suffering its biggest one-day drop since June, as concerns flared over financing costs to support heavy AI investment spending.

Next week, about one-third of S&P 500 companies report quarterly results, including Alphabet, Microsoft and Amazon, three AI hyperscalers.

"There is still fallout from the questioning of the AI trade," said Kristina Hooper, chief market strategist at Man Group.

"There's certainly the potential that we see less invested in an AI data centre build-out next year than has been projected. So I certainly think that's giving pause."

The Dow Jones Industrial Average fell 652.82 points, or 1.23 percent, to 52,215.16; the S&P 500 lost 39.75 points, or 0.52 percent, to 7,623.68 and the Nasdaq Composite lost 53.52 points, or 0.21 percent, to 25,955.34.

Telecommunications stocks fell, weighing on the communication services sector, after a report that SpaceX was seeking thousands of cell sites for a fourth wireless carrier.

The energy sector rose 2.5 percent, hitting a record high.

Brent crude hit its highest level since late April, after Houthi attacks in Saudi Arabia stoked concern over further disruption to energy supplies from the Middle East.

American Express shares fell 3.7 percent, weighing on the Dow.

The company raised its profit forecast as it also announced plans to eliminate five percent of its workforce.

Data from the University of Michigan showed US consumer sentiment edged down near a record low in October, as rising prices because of the Middle East conflict soured households' views of the economy.

Market focus remains on the earnings season, with robust corporate profit growth underpinning gains for major equity indexes this year.

The Fed is expected to keep interest rates steady when it gives its policy statement on Wednesday, but investors will be eager for clues about whether the US central bank will hike rates at its December meeting.

Wall Street is also increasingly focused on the November 3 midterm elections, which will decide control of the US Congress. (Reuters)



Edited by Tony Sabine