US stocks ended a volatile session mostly flat on Friday as investors digested comments from Federal Reserve officials that raised questions about how quickly the central bank will end its stimulus program.

How key markets performed overnight:

  • SPI futures rose 23 points to 5335, indicating gains at the start of local trade on Monday
  • The Australian dollar edged up to 89.45 US cents, 65.8 euro cents and 93.8 yen
  • In the US, the Dow Jones rose 0.17%, while the S&P500 slipped 0.03%
  • In Europe, the FTSE was up 0.2%, the DAX added 0.3% and the CAC40 0.5%
  • WTI crude oil fell 1.3% to $US94.19, while Brent lost 0.7% to $US107.03
  • Spot gold rallied a second day, adding 1% to $US1236.63 an ounce

The Dow Jones Industrial Average rose 28.64 points, or 0.17 per cent, to 16,469.99, while the Standard & Poor's 500 Index slipped 0.62 points, or 0.03 per cent, to 1831.36. The Nasdaq Composite Index was down 11.16 points, or 0.27 per cent, at 4131.91.

The S&P's slight decline marked the first time since 2005 that the benchmark index started a year with two straight negative sessions. For the week, the Dow fell less than 0.1 per cent while both the S&P and Nasdaq lost 0.6 per cent.

Wall Street opened higher but subsequently pared gains after Philadelphia Fed President Charles Plosser said the Fed faced "immense" challenges now that it had reduced bond-buying, and that it needed to be cognisant of a potential rapid rise in future inflation.

Volatility was exacerbated by light trading volume, with about 4.61 billion shares traded on all US platforms, according to BATS exchange data, well below average, with many market participants out in the wake of the New Year's holiday, as well as a snowstorm in the northeast.

"Plosser suggested that it might not be an easy or smooth process for the Fed to unwind its balance sheet, which could have been be an indication the Fed could act sooner on ending bond buying than is currently expected," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Following Plosser's comments, Fed chairman Ben Bernanke said that the central bank was no less committed to accommodative monetary policies despite the recent announcement that it would slow its stimulus program. He also said the US economic recovery "clearly remains incomplete."

Equities briefly turned positive following the comments before returning to breakeven territory.

General Motors fell 3.4 per cent to $US39.57, one of the S&P 500's biggest decliners, after the automaker reported lower December sales, below analysts' expectations of a slight gain. Ford Motor rose 0.5 per cent to $US15.51 after its sales.

"Valuations are full, but not egregiously rich right now," said Luschini. "In order for markets to really outperform now, we need to see better growth develop and for earnings to brighten considerably."

Crude oil fell 1.3 per cent, bringing its 2014 year-to-date losses to 4.3 per cent, a fact that boosted airline stocks on Friday. Delta Air Lines rose 5.5 per cent to $US29.23 as the S&P's biggest gainer while Southwest Airlines rose 2.9 per cent to $US19.42.

FireEye surged 39 per cent to $US57.02 after the cybersecurity company acquired Mandiant Corp, the computer forensics specialist best known for unveiling a secretive Chinese military unit believed to be behind a series of hacking attacks on US companies.

Twitter gained 2.2 per cent to $US69. Shares in the social media company burst out of the gate in 2014 with a gain of more than 8 per cent.

About 62 per cent of stocks traded on the New York Stock Exchange closed higher on the day, while 59 per cent of Nasdaq-listed shares ended in positive territory.

Reuters