By Sruthi Shankar
(Reuters) - U.S. stocks edged lower on Friday, as investors booked profits after a five-day rally and reset positions ahead of an earning season that begins next week.
The rally, which was powered by hopes of a China-U.S. trade deal, strong jobs data and dovish Federal Reserve views, added 6 percent to the S&P 500 and lifted it by about 10 percent from the 20-month low it touched around Christmas.
"We've run up and people seem to be in a wait-and-watch mode before they put more money back in," said Mark Grant, chief global strategist at B. Riley FBR Inc in Fort Lauderbale, Florida.
Big banks will kick off fourth-quarter earnings season, with Citigroup Inc reporting on Monday, followed by big lenders JPMorgan and Bank of America.
The S&P 500 banks index was trading flat, with support from Citigroup's 1.0 percent rise after announcing more access to hedge fund ValueAct Capital.
After worries of a slowdown in global growth sparked a selloff in the final quarter of 2018, investors will parse the earnings reports and projections for signs of deceleration in the economy.
The S&P 500 companies on average are seen posting 14.5 percent growth in fourth-quarter profit, according to IBES data from Refinitiv. However, expectations for growth in 2019 are at 6.4 percent, down from 7.3 percent on Jan. 1.
General Motors shares surged 8 percent after the No.1 U.S. automaker gave a strong earnings forecast for 2019, powered by its revamped and highly-profitable pickup truck lineup. Shares of Ford Inc rose 1.7 percent.
This stands in sharp contrast to recent sales warnings from Apple Inc and Macy's Inc due to weakness in the crucial holiday-quarter.
Data showed U.S. consumer prices fell for the first time in nine months in December amid a plunge in gasoline prices, but underlying inflation pressures remained firm as rental housing and healthcare costs rose steadily.
At 11:42 a.m. EDT the Dow Jones Industrial Average was down 98.41 points, or 0.41 percent, at 23,903.51, the S&P 500 was down 9.31 points, or 0.36 percent, at 2,587.33 and the Nasdaq Composite was down 40.01 points, or 0.57 percent, at 6,946.06.
The technology stocks which led the recent surge, fell 0.45 percent, dragging the S&P 500 and the Nasdaq lower. Microsoft Corp fell 1.6 percent and Apple Inc dropped 1.1 percent.
Netflix Inc's shares, which have jumped more than 20 percent this year, were up 3.6 percent, with analysts turning optimistic about subscriber trends ahead of its earnings next week.
The S&P industrial index fell 0.50 percent, weighed down by 1.1 percent drop in Caterpillar after Goldman Sachs cut earnings forecast for 2018-2020.
Activision Blizzard Inc fell 9.5 percent, leading the decliners on the S&P 500, after the video game publisher transferred full publishing rights for its "Destiny" game franchise to video game developer Bungie.
Declining issues outnumbered advancers for a 1.50-to-1 ratio on the NYSE and for a 1.59-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and no new lows, while the Nasdaq recorded 13 new highs and 8 new lows.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur)
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