NEW YORK – Stocks fell slightly Friday as oil company shares like Exxon Mobil declined after the promise of fuel aid in the wake of Hurricane Katrina drove crude oil prices down. But investors took some hope in a growing consensus that a slowing economy would encourage the Federal Reserve to slow its pace of interest-rate hikes following Hurricane Katrina.
The Dow Jones industrial average (search) was down 12.26 points, or 0.12 percent, at 10,447.37. The broad Standard & Poor's 500 Index (search) was down 3.57 points, or 0.29 percent, at 1,218.02. The technology-laced Nasdaq Composite Index (search) was down 6.83 points, or 0.32 percent, at 2,141.07.
For the week, the Dow rose 0.5 percent, while the S&P climbed 1.1 percent. The Nasdaq advanced 1 percent.
"Hurricane Katrina and the magnitude of the destruction in in the Gulf Coast may give the excuse for the Fed to pause with raising interest rates," said Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, N.Y., with $800 million in stocks. "That is enough to keep demand for stocks high amid a string of bad news."
The market fluctuated in Friday's session on news that unemployment reached a four-year low, and as energy prices retreated on signs that allied nations will help cushion a U.S. oil shortage. The numbers were shadowed by fears that Katrina's widespread devastation of the Gulf coast will trigger a sharp economic downturn.
"I consider this event as critical, if not more economically damaging, than Sept. 11, 2001," said Paul McManus, senior vice president at Independence Investment LLC. "We have no idea what the extent of the damage is down there, and we may not know until next week."
Wall Street felt some relief from a drop in oil prices, which fell after the government and members of the Paris-based International Energy Agency said they would tap reserves to counter disruptions to 90 percent of oil production in the Gulf of Mexico. Gasoline futures also eased for the first time this week.
settled down $1.90 at $67.57 on the New York Mercantile Exchange (search).
Exxon Mobil Corp. (XOM) and ConocoPhillips (COP) were among the biggest decliners. Exxon shares eased 1.2 percent to $60.93 on the New York Stock Exchange, and ConocoPhillips dropped 1.6 percent to $67.87. But they rose for the week as crude oil prices climbed to records, sending gasoline prices above $3 a gallon. Refiners were the top performing sector among the 25 groups of the Standard & Poor's 500 Index this week, advancing 21 percent.
Home builders and other construction companies, such as Caterpillar Inc. (CAT), also rose on expectations the companies will benefit from reconstruction and relief efforts in the storm-stricken U.S. Gulf Coast. Cement makers rose 10.6 percent this week, while construction and engineering stocks advanced 5.6 percent. Caterpillar was up 2.3 percent to $58.26 on Friday.
Wall Street made its advance although the Labor Department said the 169,000 jobs created in August were fewer than the 190,000 predicted by economists and a July increase of 242,000, which was revised upward by 35,000. The higher job count drove down unemployment to 4.9 percent from 5 percent the month before, the lowest level in four years.
Boeing Co.'s (BA) largest union struck Friday, shutting down airplane production for the first time in 10 years. The International Association of Machinists and Aerospace Workers rejected a proposed three-year deal, saying the airline ignored demands for higher pensions, stronger job security and better health benefits. Boeing declined $1.65 to close at $64.34.
Airlines also came under more pressure from the recent surge in oil prices. Late Thursday, Northwest Airlines Corp. (NWAC) warned it could lose as much as $400 million this quarter as greater spending on jet fuel pushes the troubled air carrier dangerously close to bankruptcy. Northwest's mechanics are still on strike, but its pilots said they would negotiate a new round of pay cuts. Northwest dropped 34 cents to $3.63.
Elsewhere, Albertson's Inc. (ABS) jumped $2.32, or 11.2 percent, to $23.05 after the nation's second-largest supermarket chain said it was considering putting itself on the auction block. While Albertson's first-quarter profit nearly tripled in June, the company's sales have lagged many of its rivals since a massive 2003 strike in southern California crippled its business.
Trading was moderate on the New York stock exchange on Friday, where declining stocks beat gainers by less than 2 to 1. About 1.26 billion shares were traded, below the 1.46 billion daily average for last year.
On Nasdaq, declining stocks also outnumbered gaining stocks by less than 2 to 1, and about 1.15 billion shares changed hands, below the 1.81 billion daily average.
U.S. financial markets will be closed on Monday to observe the Labor Day holiday.
The Russell 2000 index of smaller companies fell 5.12, or 0.77 percent, to 663.33.
Overseas, Japan's Nikkei stock average rose 0.74 percent. Britain's FTSE 100 dropped 0.03 percent, Germany's DAX index fell 0.11 percent, and France's CAC-40 was lower by 0.43 percent.
Reuters and the Associated Press contributed to this report.