U.S. stocks closed little changed yesterday as a surge in oil prices and a ruling against Merck in the first trial over its recalled Vioxx painkiller sparked an afternoon sell-off. Benchmark indexes fell for the week.
"The headwinds have been building for at least the past six months with higher energy prices," said Liam Dalton, president and chief executive of Axiom Capital in New York.
Stocks had gained earlier in the day on analyst upgrades of Coca-Cola and Delphi and investor optimism that profit growth is strong enough to push the market higher.
The Dow Jones industrial average rose 4.30, to 10,559.23. The Standard & Poor's 500-stock index added 0.69, or 0.1 percent, to 1219.71. The Nasdaq composite index lost 0.52, to 2135.56.
For the week, the Dow lost 0.4 percent, the S&P 500 was down 2 percent and the Nasdaq fell 1 percent.
This week marked the unofficial end of the second-quarter earnings reporting season, with all of the Dow companies and 476 of the S&P 500 members having posted results. Seventy-one percent of the benchmark's companies that reported exceeded analysts' estimates, Thomson Financial data shows. That's the highest since the first quarter of 2004.
Analysts have trimmed forecasts for the current quarter since the beginning of July as oil prices climbed.
Benchmark crude oil for September delivery rallied 3.3 percent for the biggest one-day gain since July 1. Production disruptions in Ecuador and a failed rocket attack on two U.S. Navy vessels at a Jordanian port heightened concern that U.S. imports will decline.
The surge in oil prices sent a gauge of energy companies higher for the first day in six. The group added 1.5 percent for the best performance among 10 industry groups in the S&P 500.
Valero Energy rose $2.06, to $87.89. The stock, the S&P 500's best performer this year, had declined 6.3 percent this week. Exxon Mobil rose 71 cents, to $58.82.
Merck fell $2.35, to $28.06, for the worst performance in the Dow. The drugmaker must pay more than $253 million to the family of a Texas man who died after taking its Vioxx painkiller.
Delphi rose 44 cents, to $6.36, for the biggest jump in the S&P 500. Lehman Brothers Holdings analyst Darren Kimball raised Delphi to "overweight" from "underweight."
International Business Machines rose $1.61, to $82.76, for the second-biggest gain in the Dow. Prudential Equity Group analyst Steven Fortuna reiterated his "overweight" recommendation on the shares.
Dillard's rose $1.49, to $22.09, after its same-store sales rose for the first time in five quarters.
New York Stock Exchange composite index rose 25.30, to 7458.54.
American Stock Exchange index rose 5.50, to 1602.80.
Russell 2000 index of smaller-company stocks rose 1.32, to 652.51.
NYSE: 1.56 billion shares, down from 1.83 billion on Thursday. Advancers outnumbered decliners 5 to 4.
Nasdaq: 1.23 billion shares, down from 1.41 billion. Advancers outnumbered decliners 10 to 9.
Crude oil for September delivery: $65.35, up $2.08.
Gold for current delivery: $437.20 a troy ounce, down from $439.50 on Thursday.