NEW YORK – Blue chips recovered from a daylong slump late Friday after a fall in oil prices offset a profit warning from aluminum maker Alcoa (AA), while technology stocks rose after a judge rejected a government bid to block a takeover of PeopleSoft (PSFT) by Oracle Corp. (ORCL).
The Dow Jones industrial average (search) , down for most of the session, ended up 23.97 points, or 0.23 percent, at 10,313.07. The Standard & Poor's 500 Index (search) rose 5.54 points, or 0.50 percent, to 1,123.92. The Nasdaq Composite Index (search) closed up 24.66 points, or 1.32 percent, at 1,894.31.
For the week, both the Dow and S&P closed higher, marking the fifth consecutive week of gains for both indexes. The Dow ended up 0.52 percent, while the S&P advanced 0.92 percent.
The Nasdaq ended the week 2.7 percent higher, its largest percentage increase in three weeks.
Oil prices fell briskly through the afternoon, again moving below $43 per barrel after spiking higher on Thursday. A barrel of light crude settled at $42.81, down $1.80, on the New York Mercantile Exchange (search).
"People squaring positions and oil closing lower made the market come back a bit," said Robert Drust, managing director of listed trading at regional investment bank Wedbush Morgan.
Lower oil prices generally help stocks because they spell lower costs for companies and consumers.Producer Price Index search
A profit warning from Alcoa Inc., which slashed its third-quarter forecast by about 40 percent, weighed heavily on investors' minds and kept the Dow Jones industrial average lower for most of the session. Automotive systems manufacturer Visteon Corp.'s (VC) warnings drove new fears about the health of the auto market and overall consumer spending.
"I think investors have become a bit spoiled with all the positive pre-announcements and upside earnings surprises we've had over the last year," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "Companies have been guiding up over the last several quarters, and now investors have become overly enthusiastic. It behooves companies to keep expectations reasonable. And we're still seeing profit growth, it's just that it's moderated."
Friday's drop in wholesale prices was encouraging considering that, aside from food and oil prices, which can vary widely, the "core" PPI also fell 0.1 percent, showing that wholesale prices have become somewhat resilient to the high energy costs that have plagued Wall Street through the summer. Economists had been expecting a 0.2 percent increase in both PPI and core PPI.
"We had good news on the PPI, but you still have the nagging problem of energy prices," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "The economy is expanding, but not at a robust pace, certainly, and profits are decelerating. There's nothing to prompt us breaking out of this particular range we're in."
The economic data, combined with worrisome third-quarter profit warnings, raised new questions about whether the Federal Reserve (search) needs to raise interest rates at its Sept. 21 meeting. The Fed is widely expected to raise the benchmark lending rate from 1.5 percent to 1.75 percent. However, the unevenness of the economic recovery — lagging jobs, a lack of inflationary pressure and underperforming companies — combined with the election could persuade the Fed to hold off on a rate hike until after Nov. 2.
Shares in Walt Disney Co (DIS) rose 30 cents, or 1.31 percent, to $23.16 after news that Chief Executive Michael Eisner (search) will step down from the media conglomerate in September 2006, ending a two-decade reign after a shareholder revolt nearly cut his tenure short earlier this year.
PeopleSoft jumped $1.84, or 10.25 percent, to $19.79, while Oracle rose 53 cents, or 5.34 percent, to $10.46.
Semiconductors and chipmakers also helped the Nasdaq higher. Intel Corp. (INTC) rose nearly 2 percent, or 40 cents to $20.57, Applied Materials Inc. (AMAT) rose 3 percent, up 51 cents to $16.90 and graphics chip maker Nvidia Corp. gained 52 cents, or 4 percent, to $14.07.
But Pfizer Inc. (PFE) pulled on the Dow and S&P 500. It closed down 58 cents, or 1.8 percent, at $31.86. Shares fell after the world's biggest drugmaker pulled out of a conference scheduled for next week organized by brokerage Bear Stearns.
Saturday is the anniversary of the Sept. 11, 2001, attacks on New York and Washington. The New York Stock Exchange, Nasdaq and American Stock Exchange all held brief observances on Friday ahead of the date.
Trading was active, with 1.26 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.6 billion shares were traded on Nasdaq, just below the 1.69 billion daily average last year. Advancers outnumbered decliners on the NYSE and Nasdaq by about 3-to-2.
The Russell 2000 index of smaller companies was up 3.73, or 0.7 percent, at 569.91.
Overseas, Japan's Nikkei stock average dropped 0.8 percent. In Europe, Britain's FTSE 100 closed up 0.2 percent, France's CAC-40 rose 0.7 percent for the session, and Germany's DAX index gained 0.9 percent.
Reuters and the Associated Press contributed to this report.