Wall Street showed some resilience Friday, closing narrowly 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, while all three of the market’s major indices 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 $56.72, up 32 cents, 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 was up 3.32 points, or 0.03 percent, at the close of trading. The Dow had fallen more than 69 points in late trading before recovering at the close.
The Nasdaq composite index lost 8.63 points, or 0.4 percent — its worst finish since Nov. 3, and the Standard & Poor’s 500-stock index lost 0.56 point, or 0.1 percent.
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 intra-day high above $57 per barrel on Thursday. All three major indices 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 fact that bonds are falling has the markets a little worried,” said Bryan Piskorowski, market analyst at Wachovia Securities. “The past couple times that oil spiked, bonds rose higher and the equity investors took solace in that. Now you’ve got to wonder if bonds are feeling the effects of inflation as well.”
The technology sector was hit hard by reports that orders for semiconductors were down 22 percent in February year-over-year, even as Deutsche Bank upgraded Intel Corp. to a “buy” based on the stock’s bargain price. Intel, a Dow component, was unchanged at $23.41, while rival Advanced Micro Devices Inc. slipped 9 cents to $16.03 and Texas Instruments Inc. was down 20 cents at $25.44.
Oracle Corp. shed 62 cents to $12.54 after the company said Harry You, its chief financial officer, is resigning. The departure comes as Oracle works to assimilate PeopleSoft Inc. after its $10.3 billion acquisition. Oracle also increased its bid for software maker Retek Inc., topping German software company SAP AG’s previous bid. Retek slipped 18 cents to $11.47, while SAP slid 12 cents to $40.13.
Continental Airlines lost 18 cents to $10.58 after the airline said it will take a loss in the first quarter and could incur a large loss for all of 2005. Skyrocketing fuel prices have eaten into the company’s revenues, and the airline said its April bookings are slightly less than last year.
Citigroup lost 39 cents to $46.85 after the Federal Reserve warned the Dow industrial it needs to do a better job of regulatory oversight. In a report that ultimately approved Citigroup’s takeover of First American Bank, the Fed said future deals could be in jeopardy if Citi doesn’t do a better job of adhering to regulations.
Mortgage broker Fannie Mae added 51 cents to $55.01 despite an announced delay in filing its annual report with the Securities and Exchange Commission. The company has struggled to restate its inflated earnings, and an additional $2.4 billion in losses could be added to the previous fiscal year.
Overseas, Japan’s Nikkei stock average rose 0.89 percent. In Europe, Britain’s FTSE 100 was up 0.02 percent, France’s CAC-40 climbed 0.46 percent for the session, and Germany’s DAX index gained 0.26 percent.