Record crude oil prices dampen market optimism

US blue-chip stocks ended little changed on Friday as crude oil prices climbed above US$75 ($118) a barrel, increasing concerns about higher energy costs and offsetting optimism about strong quarterly earnings.

The Nasdaq ended down sharply. Analysts raised concerns about the outlook for computer maker Dell, which helped drag down tech shares. Still, the Dow Jones industrial average reached a six-year high for a second day.

The Dow industrials and Standard & Poor's 500 indexes had been up for much of the session, boosted by encouraging results from companies including manufacturer 3M and Google, but the fresh jump in oil prices induced selling.

"We're closer to $80 [a barrel] than to $70, and that's kind of discouraging," said Larry Peruzzi, senior equity trader at The Boston Company Asset Management, a Mellon subsidiary.

"It's getting to a point where ... consumers really start to notice it and start to curtail their spending," he added.

The Dow ended up 4.56 points, or 0.04 per cent, at 11,347.45. The S&P 500 Index closed down 0.18 points, or 0.01 per cent, at 1311.28. However, the Nasdaq Composite Index was down 19.69 points, or 0.83 per cent, at 2342.86.

For the week, the Dow ended up 1.9 per cent, the S&P gained 1.7 per cent and the Nasdaq finished 0.7 per cent higher.

Supply worries pushed US crude futures to all-time highs. Crude for June delivery settled up US$1.48 at US$75.17 after trading as high as US$75.35.

With oil trading at record highs in recent weeks and the benchmark 10-year Treasury note now yielding more than 5 per cent, equity investors have been concerned that both could hurt corporate profits down the road.

Google, the world's most-used internet search engine, rose more than 5 per cent a day after the tech bellwether reported earnings that easily beat estimates. Google shares rose 5.3 per cent, or US$22.10, to US$437.10.

3M, the maker of Scotch tape and Post-It notes, announced a 16.6 per cent increase in quarterly profit and boosted its full-year forecast. Its shares rose 3 per cent, or US$2.46, to US$85.06.

"Earnings are coming in better than expected ... but the overriding concern to me is high energy prices and what the Fed is doing," said Barry Hyman, equity market strategist at Ehrenkrantz, King, Nussbaum.

The Federal Reserve is expected to raise benchmark short-term interest rates by a quarter percentage point, to 5 per cent, at its next policy meeting on May 10.

In Nasdaq trading, Dell lost 4.4 per cent, or US$1.23, to US$27.01. A broker downgraded the computer maker, saying the company is losing its price advantage.

Shares of energy companies, including Exxon Mobil, rose as oil prices surged.

- REUTERS