US benchmark equity indexes closed lower Friday as markets assessed a report showing consumer spending rose less than expected in May.

The Nasdaq Composite fell 0.7% to 17,732.6, while the S&P 500 lost 0.4% to 5,460.5. The Dow Jones Industrial Average dropped 0.1% to 39,118.9. Communication services posted the steepest decline among sectors, followed by consumer discretionary. Real estate led the gainers.

For the week, the Dow and the S&P 500 ticked 0.1% lower each, while the Nasdaq rose 0.2%.

In economic news, US consumer spending increased less than projected last month, while inflation slowed at the monthly and annual levels, data from the Bureau of Economic Analysis showed. Growth in the Federal Reserve's preferred inflation measure -- which excludes the volatile food and energy components -- eased in line with Wall Street's projections.

"(Fed) officials will want to see a few more encouraging inflation reports before beginning to cut interest rates, but they will not wait until inflation falls to their 2% target," Oxford Economics said in a note.

US consumer sentiment fell less than estimated in June, while year-ahead inflation expectations dropped, the University of Michigan's Surveys of Consumers showed.

"While consumers exhibited confidence that inflation will continue to moderate, many expressed concerns about the effect of high prices and weakening incomes on their personal finances," Surveys of Consumers Director Joanne Hsu said.

The US 10-year yield rose 9.6 basis points to 4.38%, while the two-year rate gained 2.9 basis points to 4.75%.

Richmond Fed President Tom Barkin said that the US economy has been resilient despite a tight monetary policy, but should eventually slow further.

"The US economy, particularly its consumer, has been much more resilient to rate increases than most expected and is likely to stay so as long as valuations remain elevated, and unemployment remains low," Barkin said.

On Thursday, Fed Governor Michelle Bowman said that she continues to see numerous upside risks to inflation and that she doesn't think policymakers are ready to cut interest rates. Separately, Atlanta Fed President Raphael Bostic said he still believes the Federal Open Market Committee could start reducing rates in the fourth quarter.

West Texas Intermediate crude oil fell 0.3% to $81.50 per barrel Friday.

In company news, Nike (NKE) shares tumbled nearly 20%, the steepest decline on the S&P 500 and the Dow. The athletic footwear and apparel maker late Thursday lowered its full-year revenue outlook after logging a surprise decline in fiscal fourth-quarter sales even as its earnings outperformed estimates.

Wedbush Securities said in a Friday note to clients that the challenges facing Nike are "clearly more impactful" than previously expected.

Synchrony Financial (SYF) was the top gainer on the S&P 500, up 6.7%, as Baird initiated coverage with an outperform rating and a $56 price target.

Gold dropped 0.1% to $2,335.10 per troy ounce, while silver rose 0.5% to $29.41 per ounce.