NEW YORK – Stocks ended narrowly mixed Thursday after treading water all session, with oil prices remaining a constant worry and investors looking for bargains after the previous session's sharp drop.
The Dow Jones industrial average (search) was down 6.72 points, or 0.06 percent, at 10,626.35, a three-week low. The Standard & Poor's 500 Index (search) was up 2.14 points, or 0.18 percent, at 1,190.21, closing off session highs. The Nasdaq Composite Index (search) was up 0.67 points, or 0.03 percent, at 2,016.42.
Traders said volatility increased as Friday approaches when the long-awaited adjustment of the Standard & Poor's indexes coincides with the quarterly expiration of March futures and options contracts — known as quadruple witching.
"It's very choppy because it's the day ahead of the witching and the S&P rebalance," said John O'Donoghue, CSFB managing director of listed trading, "Oil, which was up a dollar, has backed off a little and that's probably the reason for a spike in the S&P in the middle of the day. But it's almost a derivatives-driven market at the moment."
Many investors were indecisive as they watched oil prices fluctuate. Light, sweet crude for April delivery passed $57 a barrel in electronic trading prior to the open of the regular session on the New York Mercantile Exchange (search), but settled at $56.40, down 6 cents.
Dow component AIG's (AIG) stock slid $2.10 to $60.80 after The Wall Street Journal reported that an accounting review of the insurance giant has uncovered some figures that may have to be adjusted.
The market got support from energy stocks like Exxon Mobil Corp. (XOM), which climbed 2 percent, or $1.20 to $61.49, while ConocoPhillips (COP) rose 1.4 percent, or $1.46 to $107.97.
Oil rose despite a pledge by OPEC to increase its output. Oil traders were more focused on a report from the cartel that said the growing economies of the United States, China and Japan would push demand for oil even higher later this year.
Richard Dickson, senior market strategist at Lowry's Research Reports in Palm Beach, Fla., said it was encouraging that stocks did not fall further after Wednesday's 112-point slide, which apart from oil was prompted by Wednesday's profit warning from General Motors.
"What's fairly obvious though ... is that we haven't seen prices fall far enough to generate enough enthusiasm to make them break out of this funk," Dickson said.
Investors are worried that the high oil price could hurt economic growth and corporate earnings and stoke inflation, prompting the Federal Reserve to become more aggressive in its interest rate policy.
The number of Americans filing new claims for jobless benefits fell 10,000 last week, largely in line with expectations, a government report showed on Thursday.
Separately, a key gauge of future U.S. economic growth rose 0.1 percent in February, in line with expectations, a private research firm said on Thursday
Media companies' shares got a boost after Viacom Inc. (VIAB) said it is considering splitting in two. Viacom rose about 3.7 percent to $37.34. Rival Time Warner Inc. (TWX), the world's largest media company, rose 3 percent to $18.64 on speculation that it could be the next to sell or spin off assets.
"The news in Viacom has been very big for the media sector," said Tim Heekin, director of trading at San Francisco investment bank Thomas Weisel Partners. "The knock-on effect is that it should get Time Warner and Clear Channel, and some of the other big-cap names performing very well. That's been the leadership today, while the weakness has been in insurance stocks and pharmaceuticals."
General Motors Corp. (GM) dragged the market, extending its slide a day after the world's largest carmaker warned its 2005 earnings will be as much as 80 percent below its previous forecast due to slumping North American auto sales. GM shares fell 3 percent, or $2.10 to $60.80.
On the upside, United Technologies Corp. (UTX) added 86 cents to $102.437, and Wal-Mart Stores (WMT) gained $1 to $52.33.
Toys R Us Inc. (TOY) rose $1.23 to $26 after it said will be acquired for $26.75 per share, or $6.6 billion plus assumed debt, by an investment group including Kohlberg Kravis Roberts & Co.
Apple Computer Inc. (AAPL) rose 2.6 percent, or $1.07 to $42.25 after Goldman Sachs raised its quarterly earnings estimate on expectations of stronger sales of Apple's popular iPod music device.
Overall, trading was active, with 1.58 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.7 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year. Advancers outnumbered decliners on the New York Stock Exchange by about 3-to-2. Advancers and decliners were about even on Nasdaq.
The Russell 2000 index of smaller companies was up 2.54, or 0.41 percent, at 625.46.
Overseas, Japan's Nikkei stock average fell 0.82 percent, Britain's FTSE 100 fell 0.31 percent, Germany's DAX index rose 0.16 percent, and France's CAC-40 rose 0.32 percent.
Reuters and the Associated Press contributed to this report.