US stocks gain on Nike, Apple news

US stocks have taken a breather after last week's records, ending a volatile few days in the red as some investors snapped up profits before the third quarter closes.

In four of the five days, the Dow finished the trading session with swings of more than 100 points in either direction, a shift from the low-volatility trend of much of 2014.

In the end, the Dow fell 166.59 points (0.96 per cent) to 17,113.15.

The broad-based SP 500 dropped 27.55 (1.37 per cent) to 1,982.85, while the tech-rich Nasdaq Composite Index declined 67.60 (1.48 per cent) to 4,512.19.

Analysts cited myriad reasons for the pullback.

This week's move by the US and allies to bomb jihadists in Syria, coupled with President Barack Obama's sober speech at the United Nations on the threat of militants, underscored that the US response 'could be a long, drawn-out process,' said Bill Lynch, director of investment at Hinsdale Associates.

Russia also remained on the radar screen, as investors speculated on President Vladimir Putin's response to tougher US and European sanctions on the country.

Market watchers are particularly edgy over the impact of the Russia tensions on the fragile eurozone economy.

US economic data was mixed, with sales of new single-family houses surging to their highest level in more than six years and the Commerce Department revising second-quarter economic growth to an annual rate of 4.6 per cent, from 4.2 per cent.

On the downside, US durable goods orders plunged 18.2 per cent due to a big drop in the volatile transportation sector.

But most of the US economic reports came in as expected, said Lynch, who characterised this week's newsflow as far more sedate after last week's Scotland independence vote and Alibaba's initial public offering.

'This week the market was pretty much devoid of anything major,' he said.

'There was a combination of all these little factors that when added up caused some volatility.'

Art Hogan, chief market strategist at Wunderlich Securities, said the jerkiness in trade was 'really typical of volatility at the end of the quarter' as investors square positions and take profits.

Hogan said the outlook for the US economy still looks solid, but that the rising US dollar remains a concern for US markets, in part because US dollar-denominated commodities like oil are weighted down by a strong greenback.

'It's difficult when the dollar continues to firm to have a sustained rally in the market when you have some 20 or 25 per cent of the equities directly tied to commodity prices,' Hogan said.

Apple endured a bruising on Thursday, dropping 3.8 per cent following a glitch in its newest operating system and complaints that its latest iPhone models bend easily.

But on Friday, the tech giant rallied 2.9 per cent as it released a new version of a software update that had earlier caused glitches in iPhones.

Apple also rebutted the charge over bending, saying it has only received nine complaints in millions of sales.

Pharmaceutical stocks retreated after the US Treasury Department on Tuesday unveiled new tax rules designed to curb inversion deals, in which US companies merge with foreign businesses to relocate in a lower tax address.

Medical equipment firm Medtronic, planning a $US43 billion ($A46.52 billion) inversion merger with Covidien that would transfer its tax domicile to Ireland, finished the week 4.3 per cent lower.

But AbbVie, which has sought a $US52 billion inversion merger with Ireland's Shire Pharmaceuticals, finished the week 0.2 per cent higher after initially declining.

Corporate news will take a more central spot in a few weeks when third-quarter earnings season kicks off in earnest in mid-October.

But before that, the market will have a chance to digest a heavy week of US economic data next week that includes the Conference Board report on US consumer confidence for September, the SP/Case-Shiller home prices index for July and the September US jobs report.

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