Stocks were slightly lower Friday, dragged down by a disappointing outlook from Microsoft and a souring consumer mood. American Express jumped after beating forecasts.
Crude oil shot back up over $119 a barrel after a worker strike in Nigeria crimped production and as U.S.-Iran tensions heated up after a U.S.-contracted ship fired at least one shot toward an Iranian boat.
In economic news, the University of Michigan reported its consumer-sentiment index fell to 62.6from a midmonth reading of 63.2 and 69.5 at the end of March. This was the lowest the gauge has been since March 1982, when it hit 62.
The market buzz grew louder about whether the Federal Reserve is approaching a turning point and will stop cutting interest rates. Most Fed watchers expect policy makers to cut rates another quarter percentage point when they meet next week, but to indicate in their statement an end to this current cycle of cuts.
"To abruptly stop might be too difficult. They’ve got to play a little bit into expectations," Art Cashin, floor manager at UBS, told CNBC Friday. "The Fed has to use the statement to prove that they're ending but probably give the 25 basis points."
"We’re showing signs that the bottom is being put in here and there’s going to be a couple of things where they ring the bell again," Art Hogan, managing director at Jefferies, told CNBC, citing next week's Fed meeting and barrage of earnings reports as potential catalysts.
General Motors shares skidded after Moody's slashed its ratings outlook on GM to "negative" from "stable," saying the finance division's capacity to provide funding may be hampered by weakness at subsidiary Residential Capital. The UAW union on Friday extended a strike deadline at a GM metal-stamping plant in Michigan.
A disappointing outlook from Microsoft kept the tech-heavy Nasdaq in the red.
Microsoft reported its net income fell 11 percent in a report after the bell Thursday. The software giant also issued an outlook for the current quarter at the low end of expectations, which sent the stock down about 6 percent.
Yahoo shares fell 2 percent as this weekend is the three-week deadline Microsoft set for Yahoo to make a decision on its offer.
In a post-earnings call with analysts, Microsoft CFO Chris Liddell echoed comments made in the past week by CEO Steve Ballmer that the software giant is prepared to move ahead if a deal can't be reached and take its offer straight to shareholders.
Apple rebounded after taking a hit from its disappointing outlook.
American Express beat earnings expectations in a report after the closing bell, though net fell 6 percent.Revenue rose 11 percent due to higher card-member spending.
Goodyear Tire & Rubber kicked off the morning reports with a surprisingly high profit. The largest US tire maker swung to a profit of $147 million, or 60 cents per share, compared with a net loss of $174 million, or 96 cents per share, a year earlier. Excluding one-time items, Goodyear earned 67 cents a share, surpassing analyst expections of 48 cents per share, according to Reuters Estimates.
The dollar continued to gain ground on the euro and then yen, with investors speculating that the Federal Reserve might be done cutting rates after recent encouraging economic numbers.
"It's a question of change in sentiment," Manus Cranny of MF Global Spreads told "Worldwide Exchange."
"There is a step forward. We think the focus is very much on the data."
"If you look at the weekly unemployment figures, the debate is out there when we are in a recession, whether we're ready to enter a recession or whether we're in a u-shape," Cranny said.
"But the timing and sentiment has become a little more positive."