Stocks Slip on Oil Worries, Dismal Data

After an early rise out of the gate, the Dow dips into the red following mixed earnings reports, surging oil prices and the latest U.S. consumer confidence numbers.
By Sarina Penn ,

Updated from 10:49 a.m. EDT

Stocks in the U.S. fell into the afternoon Friday as investors digested mixed earnings reports, a return to surging oil prices, and a confirmation of poor consumer-sentiment numbers.

The

Dow Jones Industrial Average

rose out of the gate, but was recently shedding 69 points to 12,780, and the

S&P 500

lost 4 points to 1385. The

Nasdaq Composite

, dragged lower by

Microsoft's

(MSFT) - Get Report

disappointing near-term guidance, was sliding 32 points to 2397.

"I think we're just seeing a normal Friday in a somewhat jittery market," said Steven Sheldon, CFA and principal with SMS Capital Management. "I think the market's just getting set up for next week's

Federal Reserve meeting, and oil prices continue to be rather volatile. Every day we're getting head-faked up and down."

Crude-oil futures, after sustaining a big drop Thursday, were ballooning in the new session on a raft of supply-disruption concerns.

News broke that a ship contracted by the U.S. military fired warning shots at two Iranian ships, which spurred worries of a U.S.-Iran conflict that could halt shipments from the Gulf. Also, Militants in Nigeria said they had attacked another pipeline, and

Bloomberg

reported that Britain's

BP

(BP) - Get Report

will begin shutting down a major North Sea pipeline tomorrow ahead of a planned refinery strike in Scotland.

Crude was jumping $2.91 to $118.97, and gold futures were also taking back some of yesterday's losses, lately climbing $5.30 to $892.10.

The dollar continued to edge higher against the euro, however, recently adding 0.3% at $1.5630 after backpedaling from more substantial early gains. Against the yen, the greenback was off 0.2% to 104.16.

On the data side, the University of Michigan's April consumer-confidence reading was revised slightly downward to 62.6 in April, a dismal level not seen since the early 1980s. That's about 7 points lower than March. The survey found that 9 out of 10 American consumers believe the U.S. is already in recession.

As for corporate news, Microsoft shares sagged 6.4% after the software giant offered soft guidance for the fiscal fourth quarter, even as it projected more robust numbers for fiscal 2009 and bested last quarter's analyst targets.

Similarly, disk-drive maker

Western Digital

(WDC) - Get Report

beat top- and bottom-line analyst views for the fiscal third quarter, and issued fourth-quarter profit guidance of 77 cents to 83 cents a share. Wall Street is looking for 80 cents. The company said a bigger-than-expected decline in demand for its products should weigh on current-quarter sales. Shares were tumbling 8.7%.

On a brighter note,

American Express

(AXP) - Get Report

gave support to the Dow after its first-quarter profit drop wasn't as steep as analysts were expecting, thanks to its international presence. The credit-card company also reaffirmed its above-consensus view for the full year. Shares tacked on 3.4%.

Goodyear

(GT) - Get Report

was also having a good day, lately climbing 6.3%, after the tire maker reported swinging to a profit on a "record" top line of $4.9 billion. The company also trounced Street profit views on an adjusted basis.

In the last session, the major averages closed on an upswing, in spite of some poor earnings, thanks to a surging greenback and cooling crude oil prices.

Among the new day's research calls,

Wal-Mart

(WMT) - Get Report

was upgraded to buy from neutral at Merrill Lynch, while

Ford

(F) - Get Report

was downgraded at JPMorgan, Bear Stearns and Merrill a day after the automaker's earnings-inspired rally.

Oppenheimer initiated three ethanol stocks,

Pacific Ethanol

(PEIX) - Get Report

,

VeraSun

( VSE) and

Aventine Renewable Energy

( AVR), with perform ratings, and Citigroup upgraded China-based Internet stocks

Baidu.com

(BIDU) - Get Report

and

Sohu.com

(SOHU) - Get Report

to buy from hold.

Treasury prices were losing some ground. The 10-year note lost 6/32 in price to yield 3.85%, and the 30-year bond lost 9/32 in price, yielding 4.56%.

Overseas markets were mixed. In Asia, Tokyo's Nikkei 225 jumped 2.4% overnight, and the Hang Seng Index in Hong Kong declined 0.6%. As for European bourses, the FTSE 100 in London, Germany's Xetra Dax, and the Paris Cac were each rising 0.7% or more.

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