By Lewis Krauskopf, Tharuniyaa Lakshmi and Ragini Mathur
Oct 23 (Reuters) - The Dow Industrials and S&P 500 closed lower on Friday while technology shares steadied to end a turbulent week for the market-driving AI trade, and investors looked ahead to a busy slate of corporate earnings and a Federal Reserve interest-rate policy meeting.
Most S&P 500 sectors were weaker on Friday, including declines for the consumer staples and financial groups.
Next week, about one-third of S&P 500 companies report quarterly
results, including Alphabet, Microsoft and Amazon, three AI hyperscalers whose capital spending forecasts will be closely watched on Wall Street.
"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 center build-out next year than has been projected. So I certainly think that's giving pause."
According to preliminary data, the S&P 500 lost 39.57 points, or 0.52%, to end at 7,623.86 points, while the Nasdaq Composite lost 55.17 points, or 0.21%, to 25,955.34. The Dow Jones Industrial Average fell 658.82 points, or 1.25%, to 52,209.16.
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, 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.
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. S&P 500 companies are on track to have increased earnings by more than 32% in the third quarter, according to LSEG IBES data.
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.
(Reporting by Lewis Krauskopf in New York, Tharuniyaa Lakshmi and Ragini Mathur in Bengaluru; Editing by Shinjini Ganguli and Matthew Lewis)
