Stocks Mixed as Oil Rises Again

Wall Street showed some resilience Friday, closing mixed even as oil prices settled at a new high and raised more concerns about inflation. The Nasdaq composite fell to a four-month low on weakness in semiconductor stocks, and all three major indexes finished the week lower.

With analysts warning that oil prices could pressure profits -- and Continental Airlines coming out with significantly lower earnings estimates because of costlier jet fuel -- investors were faced with the task of adjusting their portfolios to the new economic realities.

Near-term oil futures rose for the fifth time in six sessions, with a barrel of light crude settling at a record $56.72, up 32 cents, on the New York Mercantile Exchange. For the week, oil rose 4%.

“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 points, or 0.03%, 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. Nasdaq lost 8.63 points, or 0.4%, to 2,007.79, its worst finish since Nov. 3. The Standard & Poor’s 500 index was down 0.56 point, or 0.05%, to 1,189.65.

Declining issues outnumbered advancers by more than 7 to 5 on the New York Stock Exchange.

Trading was 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.

Friday also was “quadruple witching day” on Wall Street, in which investors cash in options and futures contracts and many decide to offer or accept new ones, all of which may have accounted for the rise in stock prices at day’s end.

Rising oil prices plagued the markets all week, reaching a record close Wednesday and again Friday and posting an intraday high above $57 a barrel Thursday. All three major indexes posted their second straight week of losses. For the week, the Dow fell 1.34%, the S&P; was down 0.87% and Nasdaq lost 1.66%. Nasdaq is down 7.7% year to date.

U.S. Treasury yields rose Friday amid new inflation fears.

The Federal Reserve is expected to raise its key lending rate to 2.75% from 2.5% when its Open Market Committee meets Tuesday. But analysts say many investors are more concerned about what sort of signal monetary policymakers might send regarding the pace of future interest rate increases.

The focus is on a single word, with analysts debating whether the central bank will retain its pledge to be “measured” in tightening monetary policy.

The yield on the benchmark 10-year Treasury note climbed to 4.50% from 4.47% on Thursday.

“The fact that [bond prices] are falling has the markets a little worried,” said Bryan Piskorowski, a 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 dollar gained ground against foreign currencies. The euro traded at $1.331, down from $1.338 on Thursday.

In other market highlights:

* The technology sector was hit hard by reports that orders for semiconductors were down 22% in February year over year. Broadcom fell 62 cents to $29.47, National Semiconductor lost 60 cents to $20.39 and Texas Instruments was down 20 cents to $25.44.

Industry leader Intel was unchanged at $23.41 after Deutsche Bank upgraded the stock to a “buy” based on what its analyst called a bargain price.

* PalmOne tumbled $1.90 to $22.15. The maker of mobile phones and hand-held computers said earnings this quarter would miss analysts’ estimates. Excluding some costs, profit will be 25 cents to 32 cents a share. Analysts expected 52 cents.

* RadioShack sank $3.11 to $24.60. The 11% drop was the steepest in the S&P; 500. The No. 3 U.S. electronics chain said quarterly earnings would decline for the first time in more than two years because of a slowdown in sales of wireless phones and batteries.

* Continental Airlines lost 18 cents to $10.58 after the carrier said it would 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 revenue, and the airline said its April bookings were slightly less than last year.

* Citigroup lost 39 cents to $46.85 on news that the Fed has warned the company to improve its oversight and compliance measures. The Fed said future takeover deals could be in jeopardy if Citi doesn’t do a better job of adhering to regulations.