(Updates with latest market prices and developments.)
US benchmark equity indexes were mostly lower intraday, while bond yields rose, as investors assessed Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole economic policy symposium.
The Nasdaq Composite was down 0.4% at 26,438.2 after midday Friday, while the S&P 500 fell 0.2% to 7,716.9. The Dow Jones Industrial Average was little changed at 53,564.9. The indexes finished the previous trading session in the green, with the Nasdaq recording its biggest single-day percentage gain since Aug. 4.
Among sectors, utilities led the laggards intraday Friday, while consumer discretionary and communication services saw the biggest gains.
In his debut Jackson Hole speech as Fed chief, Warsh said Friday that inflation numbers were concerning, citing the Fed's preferred metric -- the personal consumption expenditure price index -- which was unchanged at 3.7% year over year in July.
"The comparable measures from the consumer price index are also elevated, as are the core measures of both PCE and CPI inflation," Warsh said. "None of these measures are perfect, but they all tell a similar story: Inflation is running above our 2% target. So the Fed's predominant focus right now should be on prices."
The odds of a quarter-point rate hike next month rose to about 58% on Friday from 35% the day before, according to the CME FedWatch tool. The probability that the Federal Open Market Committee will keep the benchmark rate steady fell to 43% from 65%.
US Treasury yields jumped intraday Friday, with the two-year yield up 10.9 basis points at 4.34% and the 10-year yield rising 5.4 basis points to 4.73%.
"With core inflation above target for more than five years and, in our view likely to stay elevated, markets responded (to Warsh's remarks) accordingly," Stifel said in a note e-mailed to. "For equities, we would anticipate a hawkish message continuing to tighten financial conditions as investors once again embrace the 'Don't Fight the Fed' playbook."
US consumer sentiment dropped in August amid concerns that inflation will continue to be high for the "foreseeable future," final results of a University of Michigan survey showed Friday.
In company news, Paypal (PYPL) shares were down 12% intraday, the worst performer on the S&P 500, after Bloomberg News reported that buyout firm Advent and payment-processor Stripe have ditched their bid to buy the company.
Marvell Technology (MRVL) followed Paypal on the index, down 10%, despite reporting stronger-than-expected second-quarter results late Thursday.
Workday (WDAY) was the top gainer on the S&P 500, up 6.1%. The finance and human resources solutions provider raised the low end of its full-year subscription revenue outlook after it recorded fiscal second-quarter results above Wall Street's estimates.
West Texas Intermediate crude oil edged down 0.1% to $83.47 a barrel intraday Friday, while Brent dipped 0.4% to $89.39.
Spot gold fell 2.7% to $4,476.72 per troy ounce, while silver lost 4.2% to $67.32 per ounce.
