Wall Street showed some resilience on Friday, closing mixed even as oil prices settled at a new high and raised more concerns about inflation. The NASDAQ composite index fell to a four-month low on weakness in semiconductor stocks, and all three indexes finished the week lower.
With analysts warning that oil prices could pressure profits -- and Continental Airlines Inc coming out with drastically lower earnings estimates due to costlier jet fuel -- investors were faced with the task of adjusting their portfolios to the new economic realities. Oil prices climbed higher, with a barrel of light crude settling at a record US$56.72, up US$0.32, on the New York Mercantile Exchange.
"Even if we were to see a quick pullback in oil, I don't think that'll reverse the trend, and there are still some negative implications for the market," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research in Cincinnati. "I think you'll start to see companies, like the airlines, fessing up to the fact that these oil prices are going to hurt."
The Dow Jones industrial average rose 3.32, or 0.03 percent, to 10,629.67. The Dow had fallen more than 69 points in late trading before recovering at the close.
Broader stock indicators lost ground. The NASDAQ composite index lost 8.63, or 0.43 percent, to 2,007.79, its worst finish since Nov. 3. The Standard & Poor's 500 index was down 0.62, or 0.05 percent, at 1,189.59.
Trading was very brisk as mutual funds tracking the S&P 500 adjusted their holdings. The index was rebalanced to more accurately reflect the number of shares of each company available in the market. It was also "triple witching day" on Wall Street, in which investors cash in options and futures contracts and offer new ones, which may have accounted for the rise in stock prices by the end of the day.
Rising oil prices plagued the markets all week, reaching a record close on Wednesday and again Friday, and posting an intraday high above US$57 per barrel on Thursday.
All three major indexes posted their second straight week of losses. For the week, the Dow fell 1.34 percent, the S&P was down 0.87 percent, and the NASDAQ lost 1.66 percent. The NASDAQ is down 7.7 percent for the year to date.
Bonds fell along with stocks Friday, with the yield on the 10-year Treasury note climbing to 4.51 percent, up from 4.46 percent late Thursday. The dollar gained ground against most major currencies, while gold prices fell.
The Russell 2000 index of smaller companies was down 2.96, or 0.46 percent, at 622.50.