NEW YORK - A fresh spike in crude oil prices above 55 dollars rattled the stock market Thursday amid a mixed set of economic news and end-of-quarter portfolio adjustments.
The Dow Jones Industrial Average fell 26.23 points (0.25 percent) to 10,514.70 and the Nasdaq composite shed 6.53 points (0.33 percent) to 1,999.14 at 1550 GMT in a pullback following a strong rally Wednesday.
The broad-market Standard and Poor's 500 index was nearly flat, edging up a fractional 0.37 point (0.03 percent) to 1,181.78.
Investors tried to make sense of conflicting signals on the health of the economy as the latest batch of data came in mixed. US weekly jobless claims rose 20,000 to 350,000, signaling possible weakness in the labor market.
"This is an unpleasant surprise but it is almost certainly a reflection of the seasonal adjustment difficulties caused by early Easter," said Ian Shepherdson, chief US economist at High Frequency Economics.
Also, consumer spending rose sharply and personal income growth increased in February, while a key measure of inflation slipped a notch, the Commerce Department said.
The report shows "fairly solid underlying strength to the economy," said Michael Sheldon of Spencer Clarke LLC.
The Chicago Purchasing Managers' index, giving a hint of the national manufacturing report due Friday, shot up to 69.2 percent.
But in the biggest negative, crude-oil futures climbed back above 55 dollars a barrel level, extending the prior session's late gains, after Goldman Sachs raised its oil price outlook and said oil could eventually top 100 dollars a barrel.
"We believe oil prices have entered the early stages of a superspike period," said analyst Arjun Murti, who raised his price range to 50-105 dollars a barrel from 50-80 dollars.
Sheldon said however that stock trading activity was muted with many investors awaiting Friday's report on US payrolls, seen as the best indicator of economic activity going forward.
"You could see a little bit of activity among specific companies given the fact that today is the last day of the quarter and portfolio managers may try and reposition themselves in various companies in which they have been active over the last three months," he noted.
Among active shares, drugmaker Elan Corp. shares plunged 3.86 or a whopping 55 percent to 3.12 whiles shares of Biogen tumbled 4.05 or 10 percent to 34.30 after a devastating update on Tysabri, the drugmakers' treatment for multiple sclerosis.
The two companies said a patient who was enrolled in a Phase III clinical trial testing Tysabri for the treatment of Crohn's disease has now been confirmed to have died from progressive multifocal leukoencephalopathy, a rare brain infection.
Freddie Mac, the government-chartered mortgage giant, edged up a penny to 63.91 after issuing its long-awaited financial results for 2004.
BellSouth shares rose 38 cents to 26.12 after investment bank UBS upgraded the carrier to "buy" from "neutral," saying it expects the telecom group's margins to increase due to lower pension expense and lower spending on growth initiatives.
Bonds strengthened. The yield on the 10-year US Treasury bond dipped to 4.514 percent from 4.558 percent Wednesday and that on the 30-year bond eased to 4.769 percent from 4.807 percent. Bond yields and prices move in opposite directions.
03/31/2005 16:03 GMT