NEW YORK (TheStreet) -- U.S. stocks leveled off mid-morning on Friday after a top Federal Reserve official urged a hastened rate hike timetable.
The Dow Jones Industrial Average and the S&P 500 were flat, while the Nasdaq inched 0.04% lower. If the Dow and S&P 500 can finish higher on Friday, the indices will notch another record-setting high.
"While a low inflation rate may suggest a somewhat lower-than-normal policy rate, that effect is not large enough to justify remaining at the zero lower bound," St. Louis Federal Reserve President James Bullard told an economic forum on Friday.
Bullard, a long-time Fed hawk, said lower oil prices and a tightening job market were indicative of the U.S. economy's strength and justified a rate hike as early as the first quarter of next year.
The comments overshadowed better-than-expected October retail sales which positively portended the holiday shopping season. Spending excluding gasoline, autos and food services increased 0.5%, the biggest increase since August and above an expected 0.4% increase.
A rise in consumer spending has been partially credited to lower oil prices. On Thursday alone, oil plunged 3.7% to under $75 a barrel.
"Four years ago when Americans last devoted less than 10% of total spending to gasoline stations, the cost of gasoline was just $2.73," Interactive Brokers chief market analyst Andrew Wilkinson wrote in a note. "The current cost according to AAA is $2.92, which bodes well for holiday sales ... Lower gasoline prices appear to have inspired consumers to spend more elsewhere."
Consumer sentiment in November spiked to a seven-year high as better labor market conditions and lower gasoline prices boosted optimism. The preliminary reading came in at 89.4, its highest level since mid-2007, according to the Thomson Reuters/University of Michigan survey. Economists had expected a reading of 87.5.
Business inventories also improved, up 0.3% in September compared to an expected 0.2% increase. In August, the measure increased 0.2%.
European markets were mixed on Friday after the eurozone released GDP growth of just 0.2% in its third quarter. There were some bright spots in the report though, with France posting economic expansion for the first time this year and Greece outperforming the region with a 0.7% bump in GDP.
Pessimism over the eurozone's outlook, and its impact on global markets, remain though. The world economy is believed to be at its worst since 2012, according to those polled by Bloomberg, with a total 38% describing its position as deteriorating.
Oilfield services company Baker Hughes (BHI) slipped from earlier highs, down 0.19% after a 15% jump on Thursday. The company confirmed preliminary talks with Halliburton (HAL) over a potential merger or acquisition.
Nordstrom (JWN) shares were adding 2.5% after the retailer posted a 9% jump in sales and beat earnings estimates.
Athletic apparel company Lululemon (LULU) was down 1% after Sterne Agee cut its rating to "underperform," citing the company's numerous PR blunders over 2013.
Virgin America (VA) surged 22% after its market debut on the Nasdaq on Friday. Shares in the IPO of the Richard Branson-backed company were initially priced at $23 a share, raising more than $300 million.
--Written by Keris Alison Lahiff in New York.