The S&P 500 and Dow were slightly lower on Friday on renewed concerns over euro zone debt, but the Nasdaq stayed in positive territory on some positive corporate results in the tech space.
Moody's cut Ireland's rating by five notches, hitting European bank shares hard. Euro zone leaders have agreed on how to resolve debt crises from 2013, but failed to reassure markets about what they will do in the short term.
U.S.-listed shares of Allied Irish Bank fell 3.9 percent to $1.24 while Barclays dropped 2.7 percent to $16.15. The impact on U.S. shares not directly linked to the Irish situation were limited.
Everyone should be troubled with the situation in Europe, and we don't think this the last of the news, said Matt King, chief investment officer at Bell Investment Advisors in Oakland, California, which has $400 million in assets under management. That said, we think the austerity measures they're taking will work, and this doesn't impact our strategy here.
On the U.S. corporate earnings front, shares in Oracle Corp and Research in Motion rallied a day after both companies posted strong quarterly results. Oracle also issued an upbeat forecast.
Oracle gained 5.5 percent to $31.94 while U.S.-listed shares of RIM were up 3.4 percent to $61.23.
We've seen a lot of built-up business spending for technology, which should help the sector going into 2011, said King, who is overweight on the sector.
The Dow Jones industrial average <.DJI> was down 31.71 points, or 0.28 percent, at 11,467.54. The Standard & Poor's 500 Index <.SPX> was down 1.30 points, or 0.10 percent, at 1,241.57. The Nasdaq Composite Index <.IXIC> was up 5.90 points, or 0.22 percent, at 2,643.21.
Regional banks traded higher after Canada's Bank of Montreal agreed to buy Marshall & Ilsley Corp for $4.1 billion, sending the stock up 18 percent to $6.84. Peer regional bank KeyCorp climbed 3.2 percent to $8.35 while Regions Financial added 3.4 percent to $6.34.
The KBW Regional Banks index <.KRX> rose 0.7 percent and has risen more than 13 percent this year, including a gain of more than 12 percent in December alone despite continued debt woes from European banks.
Mergers and acquisitions rose for the first year since 2007, and may mark the start of a new, multiyear M&A cycle, with emerging economies accounting for a bigger piece of global dealmaking, according to Thomson Reuters data.
Equities reacted little to the news that the U.S. Congress gave final approval late on Thursday to the deal President Barack Obama and Republicans made to extend expiring tax cuts.
The passage was anticipated so it was priced into the market, said Patrick Becker, Jr., principal at Becker Capital Management in Portland, Oregon, which manages about $2.3 billion. However, if it hadn't gone through we would see a lot of downside today.
Market volume and volatility could increase later in the day as traders adjust or exercise derivative positions on four different types of expiring equity futures and options contracts, also know as quadruple witching.
(Editing by Chizu Nomiyama)