The Dow and the S&P 500 oscillated between gains and losses on Friday, as investors weighed a warning from Fitch over the United States' debt ceiling against drugmaker Merck's progress in developing an oral COVID-19 drug.

Shares of Merck & Co Inc jumped 9.5% and were the top boost to the Dow after positive trial data for the company's experimental oral drug for COVID-19, molnupiravir.

Back to Normalcy

"As we get more tools and arsenal of ways to make COVID-19 not as sickening and deadly as it is now and not as draconian of a diagnosis, that's very positive for a return back to 'normal activity'," said Keith Buchanan, portfolio manager at Globalt Investments in Atlanta, Georgia.

"This is a huge tool [treatment] that is oral, which is a huge component of it, and that you can pick up at the pharmacy or perhaps even show up in your mailbox days after you get the test positive for the virus."

Other COVID vaccine makers Moderna Inc and Pfizer Inc slid 11.6% and 1.1%, respectively, after the news. The wider S&P healthcare sector fell 0.4%.

Nine of the 11 major S&P sectors rose, with energy, financials and communication services leading the gains.

Bargain buying into beaten-down technology shares supported the Nasdaq. The index, along with the S&P 500, was nursing its worst month since the onset of the coronavirus crisis.

Markets turned lower in early trading after Fitch warned that extended bipartisan wrangling over raising the government's spending cap could put pressure on the United States' 'AAA' credit rating.

President Joe Biden signed a measure to continue funding the government through Dec. 3, although congressional Democrats and Republicans continued brawling over raising the debt ceiling beyond $28.4 trillion to avert a U.S. credit default

"It's unfortunate when Congress uses this as a negotiating tactic, it's a bad scenario overall," said Randy Frederick, managing director of trading and derivatives for Schwab Center for Financial Research.

"Eventually, foreign creditors might be unwilling to buy U.S. debt and if that happens, rates are going to go sharply higher and if rates shot up because people were unwilling to buy treasuries, that would have a very negative impact on the market."

Wrangling over the debt limit, coupled with a dismal performance by Wall Street in September, had investors on edge over the direction of the market. A mixed batch of economic data fueled more uncertainty.

Philadelphia Fed Bank President Patrick Harker said the economy was close to achieving inflation mandate for rate hikes, but the central bank's employment goal was still far off to justify early rate increases.

The S&P index recorded four new 52-week highs and nine new lows, while the Nasdaq recorded 36 new highs and 115 new lows.