NEW YORK – Stocks closed slightly higher Friday on news that Hurricane Rita weakened before it approached landfall, while a profit warning from Alcoa Inc. (AA), the world's largest aluminum producer, dragged on blue-chip shares.
The Dow Jones industrial average (search) ended down 2.46 points, or 0.02 percent, at 10,419.59. The Standard & Poor's 500 Index (search) was up 0.67 of a point, or 0.06 percent, at 1,215.29. The technology-laced Nasdaq Composite Index (search) rose 6.06 points, or 0.29 percent, to 2,116.84.
For the week, the Dow ended down 2 percent, the S&P fell 1.8 percent and the Nasdaq declined 2 percent.
Stocks cut their morning slide as the National Hurricane Center (search) said Rita, the second major hurricane to hit the Gulf of Mexico in less than four weeks, had weakened to a category 3 storm. The downgrade also sent oil prices down more than $2 a barrel.
"Sentiment in the stock market improved today after Rita was downgraded," said Angel Mata, managing director of listed equity trading at Legg Mason Wood Walker in Baltimore. "But before we can see a real relief rally, we have to wait until the hurricane makes landfall this weekend."
Alcoa said third-quarter earnings would be as much as 39 percent below Wall Street's average expectation. Its shares fell 5.7 percent to $24.42 on the NYSE, and was the worst performer in the Dow average.
Shares of health maintenance organizations, including Aetna Inc. (AET), UnitedHealth Group Inc. (UNH) and Wellpoint Inc. (WPT) rose after they were approved to offer prescription drug benefits under Medicare, the federal health insurance program for the elderly and disabled.
U.S. crude oil futures settled down $2.31 to $64.19 a barrel as the latest hurricane forecast eased fears of a direct hit on major U.S. oil operations in Houston. Last month, Hurricane Katrina severely damaged oil rigs and refineries and pushed oil prices to record highs.
The drop in crude hit shares of energy companies, including Exxon Mobil Corp. (XOM), down 1.7 percent at $63.88 and ConocoPhillips (COP), off 2.1 percent at $68.29. Both trade on the New York Stock Exchange.
Aetna rose 0.4 percent to $81.24, UnitedHealth Group increased 2.6 percent to $55 and Wellpoint gained 2.1 percent to $74.74, all on the NYSE.
Disappointing earnings outlooks from software maker Oracle Corp. (ORCL) also put some pressure on the market. Oracle's fiscal first-quarter earnings met expectations, but it said revenue for the second quarter would be toward the low end of expectations. Its stock slid 7.9 percent to $12.40 on Nasdaq.
Palm Inc. shares plunged almost 18 percent to $28.69 on Nasdaq after the handheld computer maker said Thursday its quarterly profit fell and posted a weak forecast.
Trading was active on the New York Stock Exchange (search), with about 1.5 billion shares changing hands, above last year's average of 1.46 billion.
On Nasdaq, about 1.6 billion shares were traded, below last year's daily average of 1.81 billion.
Advancing shares outnumbered declining stocks by a ratio of about 10 to 9 on the NYSE. On Nasdaq, advancing stocks outpaced declining shares by a ratio of about 6 to 4.