Secretary of State John Kerry urged leaders in Iraq to step up to quench the violence, while President Obama held a press conference, saying he would make a decision about the use of American military forces "in the days ahead."
However, the President emphasized that US troops would not be sent back into combat in Iraq.
Late in the day, there were unconfirmed rumors of an assassination attempt against Iraq's Prime Minister Nouri al-Maliki, which upped the tension considerably.
Crude oil prices rallied on the news, driving positive returns in energy stocks.
Thursday after the close, semiconductor giant Intel (NASDAQ:INTC) raised its second-quarter and full-year earnings guidance due to growing demand for PCs. The stock rose 6.8% Friday, and drove strong action in related stocks like Microsoft (NASDAQ:MSFT) and Hewlett-Packard (NYSE:HPQ).
PriceLine (NASDAQ:PCLN) announced a $2.6 billion bid for restaurant reservations service OpenTable (NASDAQ:OPEN). The news sent shares of OpenTable up a whopping 48.4% to $104.48, which was actually above PriceLine's bid of $103 per share.
Review site Yelp (NASDAQ:YELP) rallied 13.8% to $74.92 in sympathy.
Elsewhere in the market, we saw aggressive action in bets on the VIX (INDEXCBOE:VIX). VIX call options were trading at four times the pace of puts, meaning traders are bracing for an increase in volatility.
There was also strong demand for put options on index instruments like the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and the iShares Russell 2000 Index ETF (NYSEARCA:IWM).
Ratings firm Standard & Poor's raised its outlook for Great Britain's credit rating to stable from negative on the expectation that the nation's economic recovery will continue. However, S&P noted that Britain could suffer adverse consequences if it exited the European Union.
Tomorrow's Financial Outlook
On Monday, the June Empire Manufacturing report will be issued at 8:30 a.m. ET, followed by May Industrial Production and Capacity Utilization at 9:15 a.m., and the NAHB Housing Market Index at 10:00 a.m.
There are no major US earnings reports on the calendar.
Overseas, China's New Yuan Loans and Money Supply data will be released over the weekend, with the Euro-Zone CPI out early Monday morning.
Traders remained concerned with timing a pullback in the broader averages, and Iraq is serving as a potential downside catalyst in the eyes of many. Developments over the weekend should affect the price action Monday.
However, in recent years, it must be noted that the market has generally shrugged off geopolitical concerns, and given the amount of hedging going on, some fear may be priced in.
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