Stocks snapped a five-day winning streak Friday as a sharp drop in oil prices and profit-taking offset an improvement in consumer confidence and a rosier outlook from economic bellwether FedEx.
The Dow Jones Industrial Average shed 22.07, or 0.2 percent, to close oat 9,605.41. The S&P 500 fell 0.1 percent and the Nasdaq lost 0.2 percent.
"Both equities and oil are exhausted. Money has been coming out of dollar into equities and holding up energy all this week," Peter Kenny, managing director at Knight Equity Markets, told Reuters.
Curiously, on this, the eighth anniversary of the Sept. 11 terrorist attacks, the Dow finished within a tenth of a point from where it was the day before the attacks, 9,605.51.
Despite today's retreat, major indexes finished higher for the week: The Dow gained 1.7 percent, while the S&P advanced 2.6 percent and the Nasdaq jumped 3.1 percent.
US light, sweet crude tumbled more than $2, settling at $69.29 a barrel.
ExxonMobil and Chevron were among the biggest drags on the Dow today, along with Intel and Bank of America .
Meanwhile, gold hit a seven-month high above $1,011 an ounce as investors were looking for a hedge against the dollar's slide, before settling at $1,006.40.
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Investors shrugged off an improvement in consumers' outlook. The University of Michigan/Reuters gauge of consumer sentiment jumped to 70.2in a mid-September reading, beating expectations, after a final August reading of 65.7. And their outlook for the next year was the highest since September 2007.
Among other economic data today, wholesale inventories fell 1.4 percent to their lowest level in nearly three years in July and import prices spiked 2 percent last month.
World stocks hit fresh 11-month highs today as a weak dollar — indicating appetite for risk — and robust Chinese economic data boosted sentiment. The dollar hit its lowest level against a basked of currencies in a year.
FedEx shares shot up 6.4 percent after the economic bellwether raised its first-quarter earnings forecast, helped by cost cuts and better-than-expected international shipments.
The news also gave a boost to shares of rival package-delivery service UPS , which gained 4.4 percent.
Financials were back in the spotlight after Treasury Secretary Timothy Geithner said the US government is anxious to shed stakes in financial companiesbut will take care not to do so too soon.
"The classic mistake that countries make in crises is they put the brakes on too early, they reignite the recession ultimately at much greater fiscal costs and much greater damage to the economy. That's the balance we've got to get right," Geithner told a CNBC town hall meeting.
Financial giant Morgan Stanley ticked higher after CEO John Thain confirmed he will step down early next year. Though the move was widely expected, it likely will intensify speculation about the firm's future direction.
Goldman Sachs ended slightly lower, even after Citigroup raised its earnings projection for the firm, saying Goldman is poised to gain market share amid strong capital-markets activity, a drop in systemic risk and a better deal climate.
Campbell Soup shares finished flat after the company beat earnings expectations, helped by higher prices and increased sales of condensed soup and Prego pasta sauce as cost-conscious consumer ate at home more. The company also projected full-year earnings would top expectations.
In deal news, HSBC has made a $1.63 billion bid for Dutch financial group ING's private banking business, Reuters said, quoting a report in The Sunday Times. Other bids are expected from DBS, a Singaporean investment fund, and Swiss wealth manager Julius Baer. American depositary shares of ING fell.
And Delta may invest tens of billions in Japan Airlines, Asia's largest airline by revenue.
Alcoa shares rose 1.2 after the aluminum producer and Dow component said it will continue working with Chinese companies in a quest for mergers and acquisitions.
Oil-services giant Schlumberger rose 3.4 percent after Goldman raised its rating on the company to a "buy" and reiterated its positive view on the space.
Shares of Wynn Resorts were among the biggest percentage gainers on the Nasdaq, climbing nearly 4 percent, amid buzz that casino operator plans to raise up to $1 billion by listing its Macau assets on the Hong Kong stock exchange.
And Motorola jumped nearly 9 percent as analysts are optimistic about the firm's new cellphone, which it developed with Google . RBC raised its price target on the stock to $10 and gave it a "sector perform" rating.
It was a shortened holiday week but wasn't short on events: Stocks soared to their highest closing levels of the year Thursday amid increased M&A activity, a larger-than-expected drop in weekly jobless claims and some revamped products in the tech sector.
For the week, Disney, Alcoa and Merck were the biggest percentage gainers on the Dow, while Kraft, Travelers and McDonald's were the biggest decliners.
Kraft took a hit after Cadbury rejected its unsolicited takeover bid.
Among the week's other movers and shakers: Health insurers were in focus amid talk of health-care reform. Airline stocks were the big winners of the week after JPMorgan upgraded its rating on the sector, citing increased passenger traffic and lower fuel prices.
Chip makers AMD and Sandisk soared after an analyst upgrade. Palm skidded amid disappointment in its new Pixi and Apple hit a new 52-week high Wednesday after Steve Jobs appeared at an event for the first time since his medical leave and the company announced price cuts on some iPod products.
Smith & Wesson shares soared this week after the company beat earnings expectations amid strong demand for guns in this recession, while jeweler Harry Winston missed its target but still saw its stock rise.
Among the highlights for next week, President Obama will speak on financial reforms on Monday. Plus, readings on consumer prices, producer prices, retail sales, housing starts and industrial production. And earnings reports from Best Buy, Oracle, FedEx and Palm.
MONDAY: Obama speech; Fed's Lacker, Yellen speak
TUESDAY: PPI; retail sales; Empire State survey; business inventories; earnings from Best Buy, Adobe
WEDNESDAY: Weekly mortgage applications; CPI; current account; industrial production; weekly crude inventories; earnings from Oracle
THURSDAY: Housing starts; weekly jobless claims; Philly Fed; Earnings from FedEx
FRIDAY: Quadruple witching
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