NEW YORK – U.S. stocks ended the quarter on a down note on Friday as a drop in crude oil prices drove energy shares down and offset the positive influence of data showing tame U.S. inflation and healthy economic growth.
The Dow Jones industrial average fell 41.38 points, or 0.37 percent, to end at 11,109.32. The Standard & Poor's 500 Index slipped 5.42 points, or 0.42 percent, to 1,294.83. The Nasdaq Composite Index declined 1.03 point, or 0.04 percent, to 2,339.79.
But all three major stock indexes had their best first quarter performance in at least four years, defying the dampening effect of continued interest-rate increases by the Fed.
Shares of ConocoPhillips (COP), the No. 3 U.S. oil company, and Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, along with Schlumberger Ltd., the world's largest oil field services company, were among the top drags on the S&P 500 Index.
Stocks initially rose in morning trading after a core inflation gauge for February and a Federal Reserve official's comments eased concerns about the outlook for interest rate increases. Stronger-than-expected consumer sentiment data added to the optimistic mood.
"Considering the Fed has continued to signal that they're not finished raising interest rates, the market has done better than people would have expected in that environment," said John Forelli, senior vice president of Independence Investment LLC in Boston.
Despite the day's declines, the Dow industrials had their best first quarter since 2002. The S&P 500 had its biggest first-quarter gain since 1999 and the Nasdaq had its best quarter since the Internet bubble burst in 2000.
U.S. crude oil for May delivery dropped 52 cents to settle at $66.63 a barrel. Supply concerns in Iran and Nigeria have helped drive oil prices to nearly two-month highs this week.
ConocoPhillips shares fell 2.1 percent, or $1.33, to $63.15, while Exxon Mobil lost 0.4 percent, or 26 cents, to $60.86 and Schlumberger's stock shed 1.3 percent, or $1.66, to $126.57. Chevron Corp. shares fell 0.9 percent, or 54 cents, to $57.97 on the New York Stock Exchange.
Oil's drop gave some relief to airline stocks, which were battered earlier in the week when crude rose above $67 a barrel. Shares of US Airways Group shot up 6.7 percent, or $2.51, to $40, while AMR Corp., the parent of American Airlines, rose 3.6 percent, or 94 cents, to $27.05. Continental Airlines advanced 3.3 percent, or 87 cents, to $26.90 in NYSE trading.
Pfizer Inc. (PFE) was the top decliner in the S&P. An analyst issued a report on Friday suggesting that Colgate Palmolive Co. (CL), which is looking at Pfizer's Listerine unit, will not buy the drug maker's entire consumer products business.
Shares of Pfizer fell 1.1 percent, or 28 cents, to $24.92.
Shares of H&R Block Inc. (HRB) slid after the No. 1 U.S. tax preparer restated its annual financial statements, reducing earnings to reflect corrections in reporting its income taxes. H&R Block shares were down 1.9 percent, or 42 cents, at $21.65 on the NYSE.
Thomas Hoenig, president of the Kansas City Federal Reserve Bank, said that U.S. interest rates had been raised to a "neutral" range. Neutral refers to a point where rates are neither hindering nor spurring economic growth.
The Commerce Department's personal income and spending data for February showed a slowdown in inflation, with the core personal consumption expenditure index rising in line with forecasts. A consumer sentiment index from the University of Michigan exceeded economists' expectations.
Google Inc. (GOOG) shares rose 0.4 percent, or $1.56, to end at $390 on Nasdaq before the Web search company's addition to the S&P 500 index after the closing bell.
Trading was active on the NYSE, with about 1.62 billion shares changing hands, slightly above last year's daily average of 1.61 billion, while on Nasdaq, about 1.94 billion shares traded, above last year's daily average of 1.80 billion.
Advancing stocks outnumbered declining ones by a ratio of 11 to 10 on the NYSE while on the Nasdaq, gainers beat losers by almost 8 to 5.