Facebook lifts S&P 500 and Nasdaq as Treasury yields pause

"What we see today is a more stable rate environment across the curve after multiple weeks of rising interest rates, and we are seeing some degree of reversal of leadership in the equity market," said Bill Northey, senior investment director at US Bank Wealth Management in Minneapolis.

Facebook Inc rose 4.1 percent, providing the biggest boost to the Nasdaq and the S&P 500, after Chief Executive Mark Zuckerberg said Apple Inc's imminent privacy policy changes on ad sales would leave the social network in a "stronger position."

The S&P 500 energy index rose about 1 percent, following the price of oil higher as it rebounded from a sell-off earlier in the week related to a new wave of coronavirus infections across Europe.

The S&P 500 banks index dropped 1.4 percent after the US Federal Reserve said it would not extend a temporary capital buffer relief put in place to ease pandemic-driven stress in the funding market.

"Banks have had such a significant up move this year and this news has only acted as a catalyst for profit-taking," said Art Hogan, chief market strategist at National Securities in New York.

Optimism about a $1.9 trillion fiscal package and the Fed's promise to maintain its ultra-loose policy stance for years has accelerated a shift into economy-linked stocks, powering the S&P 500 and the Dow to record levels this week.

However, the Nasdaq is still about 6 percent below its Feb. 12 all-time closing high as technology and high-growth stocks have lost favor in recent months, with their valuations looking less attractive as Treasury yields rise.

The S&P 500 growth index rose 0.4 percent, outperforming the value index's 0.1 percent dip.

Market trading volumes and liquidity were expected to rise on Friday due to "quadruple witching," the quarterly simultaneous expiration of US options and futures contracts on stocks and indexes.

Several bond managers believe the recent pace of the rise in yields has been unsettling and also worry the market could be viewed as disorderly if the momentum continues.

The Dow Jones Industrial Average was down 0.43 percent at 32,719.53 points, and the S&P 500 gained 0.14 percent to 3,921.1.

The Nasdaq Composite added 0.74 percent to 13,213.88.

FedEx Corp rallied about 6 percent after the US delivery firm said quarterly profit jumped more than expected on higher prices and surging volume from pandemic-fueled e-commerce deliveries during the holiday shipping season.

Nike Inc shed almost 4 percent after the sports apparel maker missed quarterly sales estimates due to shipping issues and a pandemic-related slump at brick-and-mortar stores.

Advancing issues outnumbered declining ones on the NYSE by a 1.31-to-1 ratio; on Nasdaq, a 1.64-to-1 ratio favored advancers.

The S&P 500 posted 12 new 52-week highs and no new lows; the Nasdaq Composite recorded 78 new highs and 21 new lows.