Stocks closed Friday’s seesaw session lower as investors, securing positions before the second half of the year begins, sold off due to rising oil prices and lingering worries about subprime mortgage lending troubles.
The erratic day capped off a strong second quarter for Wall Street, which pushed the Dow Jones industrial average up more than 1,000 points over the last three months.
The stock market initially rose Friday, encouraged by Commerce Department data that fit well with the Federal Reserve’s assessment Thursday that the economy appears to be growing moderately and that inflation, while still a concern, seems to be easing.
Friday’s reports said May construction spending rose by the largest amount in nearly 1-1/2 years and consumer spending increased for the second month in a row. The data also indicated that “core” prices, which strip out food and energy, moderated to 1.9 percent over the last 12 months — the lowest year-over-year rate since 2004.
But the stock market couldn’t hold on to gains, as oil prices surged above $70 a barrel and jitters about subprime lending escalated.
“Oil’s over $70, and that’s going to worry some people,” said Brian Gendreau, investment strategist for ING Investment Management. “And there’s still a bit of a hangover from all these subprime problems. ... No one really knows the extent to which this is a serious problem or not.”
Last week, Bear Stearns & Cos. had to bail out a hedge fund with investments tied to subprime loans. The stock fell nearly 3 percent Friday, and other financial companies followed.
The Dow Jones industrial average closed the day down 13.66 points, or 0.10 percent, after swinging dramatically higher and lower over the course of the day. The index rose 1,054.27 points, or 8.53 percent, during the second quarter, and hit its most recent record high on June 4.
The broader Standard & Poor’s 500-stock index closed the day down 2.36 points, or 0.16 percent, while the Nasdaq composite index fell 5.14 points, or 0.20 percent.
The S&P rose 82.49 points, or 5.81 percent, in the second quarter, during which it reached record closing levels for the first time since March 2000. The Nasdaq rose 181.59 points, or 7.50 percent.
Bonds rose Friday on heightened fears of terrorist activity in Great Britain. The yield on the benchmark 10-year Treasury note fell to 5.04 percent from 5.11 percent late Thursday. The dollar slipped against most other major currencies, while gold prices edged higher.
Oil futures jumped $1.11 to $70.68 a barrel on the New York Mercantile Exchange. Crude closed above the psychologically important $70 level for the first time this year due to tight U.S. gasoline supplies.
Analysts said Friday’s stock market fluctuations were just a function of high volatility and end-of-quarter selling.
“I don’t read too much into the market on Friday; it’s a lot of the same old, same old,” said Robert Schaeffer, portfolio manager of the Becker Value Equity Fund. “There’s probably some window dressing going on out there, some minor rebalancing, so there’s some fluff in the market.”
Friday’s economic news was positive, overall.
The University of Michigan’s monthly index of consumer sentiment slipped in June compared to May by a smaller amount than expected, as did the Chicago Purchasing Manager’s Index — a precursor to the Institute for Supply Management’s manufacturing index on Monday. The PMI, which measures Midwest manufacturing activity, also showed a decrease in its prices-paid index, a sign that inflation is easing.
Meanwhile, the U.S. Department of Agriculture said farmers this year planted 92.9 million acres of corn, a 19 percent jump from 2006 and the most corn planted since the last days of World War II.
In corporate news, Apple Inc. released its iPhone to the public. The gadget, which combines the functions of a cell phone, iPod and wireless Web browser, was to go on sale in the United States at Apple and AT&T stores at 6 p.m. Friday in each time zone. Apple rose $1.48 to $122.04.
If the iPhone is a hit, it could cause weakness among other smart phone makers.
Palm Inc. on Thursday posted lower earnings for its latest quarter as sales of its signature Treo phone were offset by a downturn in handheld computers. Palm fell 54 cents, or 3.3 percent, to $16.02.
BlackBerry maker Research in Motion Corp. certainly wasn’t suffering, however, after announcing late Thursday a 3-for-1 stock split and a 73 percent surge in first-quarter profit. Research in Motion soared $34.40, or 20.8 percent, to $199.99.
Overseas, Japan’s Nikkei stock average rose 1.15 percent. Britain’s FTSE 100 rose 0.56 percent, Germany’s DAX index rose 1.09 percent and France’s CAC-40 rose 0.81 percent.