U.S. Stocks Finish Session, June Lower; Rally In Second Quarter

NEW YORK (MarketWatch) -- U.S. stocks finished lower on Friday and for the month of June, but still posted a strong performance for the second quarter.

The Dow Jones Industrial Average fell 13.6 points to close at 13,408 on Friday, as rallying crude oil prices erased earlier gains amid end-of-the quarter purchases.

The S&P 500 index fell 2.3 points to 1,503, while the Nasdaq Composite fell 5.1 points to 2,603.

For the month of June, the Dow fell 1.6%, the S&P 500 fell 1.8%, while the Nasdaq fell fractionally.

But the second quarter saw the Dow rally 8.5% in the quarter, while the S&P advanced 5.8% and the Nasdaq gained 7.5%.

The market was weighed down by concerns about rising interest rates, as troubles affecting the subprime mortgage market led to the near collapse of two hedge funds owned by Bear Stearns .

Still, global growth helped the market put in a strong performance for the second quarter. The Dow gained 8.5% in the quarter, the S&P advanced 5.5% and the Nasdaq gained 7.5%.

Defused London bomb boosts oil

The U.S. stock market showed little overall reaction to news Friday that a car bomb was defused and a street was closed in London.

But crude oil prices jumped $1.11 to close at $70.68 a barrel, gaining 8.8% in June and 2.8% in the second quarter. News of lower-than-expected gasoline supplies earlier this week also helped boost oil prices ahead of the U.S. summer driving season.

"We are seeing some volatility because of oil prices being higher," said Donald Selkin, director of equity research at Joseph Stevens. "We've had a strong quarter and people are trying to lock in some profits before it closes."

Trading volumes showed 1.6 billion shares trading on the New York Stock Exchange and 2.2 billion on the Nasdaq stock market. Declining issues topped rising stocks by 17 to 15 on the New York Stock Exchange and by 16 to 13 on the Nasdaq.

Bucking the trend among technology shares, Research In Motion jumped over 20% after the Blackberry maker announced a 76% gain in revenue and a 73% rise in profit for the most recent quarter.

And shares of Apple Inc. rose 1.2%. The company's iPhone will appear in some stores today.

But Palm Inc. was off 3.3%. The maker of the Treo smart phone reported a 43% drop in quarterly profit.

Earnings in focus

Stocks finished mixed and little changed Thursday, after the Federal Reserve held interest rates at 5.25% for the eighth straight time and said it wasn't persuaded that inflation's entirely under control.

Next week, the market's attention will turn to the upcoming second-quarter earnings season, which will get going in earnest in the second week of July.

"With the FOMC meeting behind us, rates should calm down and investors should start to focus on second-quarter earnings results," said Marc Pado, chief U.S. market strategist at Cantor Fitzgerald. "Today is the last day of the quarter."

Tame inflation

The Commerce Department reported that core consumer prices increased just 0.1% in May, in line with economists' expectations, leaving core inflation within the Federal Reserve's comfort zone for a second straight month.

Concerns about global inflation pressures have led bond yields to rise, lifting the costs of borrowing for consumers and businesses.

But Treasurys rallied Friday, after the consumer price report. The fixed income market is highly sensitive to inflation because it eats into the value of assets and increases pressure on the Federal Reserve to keep rates higher.

The 10-year benchmark Treasury bond closed up 17/32 at 95-28/32 with a yield of 5.033%.

Meanwhile, the market paid little attention to the University of Michigan's consumer sentiment index, which rose to 85.3 from 83.7 earlier in the month The MarketWatch forecast, based on a poll of economists, was for a headline reading of 84.1.
Other markets

The dollar was mixed in the wake of Thursday's Fed decision. The U.S. currency rose against the yen but fell against the euro.

Gold futures rose, extending their prior-session gains, underpinned by a mixed dollar and rising crude-oil prices. Gold for August delivery gained 50 cents to close at $650.90 an ounce on the New York Mercantile Exchange. For the quarter, gold fell 3.6%.

By Nick Godt