NEW YORK ( TheStreet) -- Stocks finished in the red Friday as oil topped $113 a barrel and a government shutdown loomed. The Dow Jones Industrial Average shed 29 points, or 0.2%, to close at 12,380, after dropping to as low as 12,321 earlier in the session. The S&P 500 gave back 5 points or 0.4% at 1328, and the Nasdaq Composite slid 15 points, or 0.5%, to 2780. For the week, the Dow edged up 4 points, or 0.03%. The S&P 500 lost 4 points, or 0.3%, while the Nasdaq lost 9 points, or 0.3%. Stocks traded mostly in the negative territory on Friday , with rising oil prices boosting energy and commodity-related stocks, while punishing auto, retail and consumer staples sectors. Merck ( MRK), Pfizer ( PFE) and Chevron ( CVX) were among the nine Dow components that finished the day in the green. Cisco ( CSCO), Alcoa ( AA) and Boeing ( BA) dragged the Dow lower on Friday. "For a long time the market was not affected by rising oil prices because the economy was improving," said Kate Warne, investment strategist for Edward Jones. "Now oil prices have moved by enough that investors are beginning to worry about how it will impact demand." Oil prices were trading at levels not seen since September 2008 with the May crude oil contract gaining $2.49 to settle at $112.79 a barrel. Meanwhile, other commodities also gained on a weaker dollar.
Gold prices hit new highs, with the June gold contract gaining $14.80 to settle at $1,474.10 an ounce. Silver prices were trading near 31-year highs, with the May contract adding $1.05 to settle at $40.62 an ounce. The government appeared set for a shutdown Friday at midnight as talks over the budget continued to stall.
The market has largely shrugged off concerns about a government shutdown in the past. Warne notes that in the last 17 times the government has shut down, the market has shed an average of only nine-tenths of a percent. Still a prolonged shutdown could have some impact on companies dependent on government contracts. Economic reports are also likely to be delayed. Warne, however, expects investors to stay focused on the earnings season, which she expects to be solid. "Economic reports are backward-looking and so are earnings reports, but investors will be listening in to management commentary during earnings conference calls which will be forward-looking," said Warne of Edward Jones.
Speculation about the Federal Reserve's next move also had markets on edge.
Richard Fisher, president of the Federal Reserve Bank of Dallas and a voting member of the policy making arm of the central bank, said in a speech Friday that the Fed had reached a tipping point in its monetary policy and must start moving towards normalizing its operations in a timely way. "In my view, no amount of further accommodation by the Fed would be wise --either by prolonging or "tapering off" the volume of purchases of Treasuries past June, or adding another tranche of large-scale asset purchases. Indeed, it may well be that we should consider curtailing what remains of QE," he said. Some are concerned that the market rally could lose momentum once the juice provided by the Fed's easy money policy -- known as QE2 -- ends in June. >>How to Trade QE2 End? Economic data on Friday was lackluster. The Department of Commerce said wholesale inventories rose 1% in February, in line with expectations. But the gains came largely on the back of increasing crude oil stockpiles Inventories of petroleum and petroleum products were up 9.3 percent from last month. Sales fell 0.8%, sparking concerns about the strength of underlying demand. Overseas, Japan's Nikkei jumped 1.9% to its highest close since the March 11 earthquake as Thursday's strong aftershock showed minimal impact and didn't cause further damage to any of the country's nuclear plants. Hong Kong's Hang Seng added 0.5%. London's FTSE gained 0.8% and the DAX in Frankfurt rose 0.5%. Shares of online travel company Expedia ( EXPE) were gained12.9% to $25.30 on news that it plans to spin off its TripAdvisor business into a separate, publicly traded company. Seagate Technology ( STX) saw its stock surge 7.8% to $15.84 after the disk drive maker reinstated its dividend and gave encouraging sales guidance. Shares of Tempur-Pedic International ( TPX) jumped 12.1% to $57.7 after it beat estimates and raised its forecast for the full year. The manufacturer of bedding products said it expects to earn 67 cents a share in the first quarter on revenue of $325 million. Analysts had expected profit of 58 cents a share and revenue of $289.12 million. Shares of Hercules Offshore ( HERO) plunged 11.3% to $5.66 on news that it was being investigated by the Securities and Exchange Commission for possible violation of securities laws and the Foreign Corrupt Practices Act. Airline stocks tanked as fuel prices climbed. Shares of US Airways ( LCC) fell 3.6%, Delta Airlines ( DAL) dropped 3.9% and JetBlue Airways ( JBLU) were shed 4.2%. The benchmark 10-year Treasury fell 8/32, lifting the yield to 3.579%. . The dollar weakened against a basket of currencies with the dollar index down by 0.9%. --Written by Melinda Peer and Shanthi Bharatwaj in New York.