Looming Gov't Shutdown, Soaring Oil Fuel Pullback

FOX Business: The Power to Prosper

The markets were spooked by oil prices soaring to 2-1/2 year highs and the potential for a government shutdown.

Today's Markets

The Dow Jones Industrial Average lost 29.4 points, or 0.24%, to 12,380, the S&P 500 slipped 5.3 points, or 0.4%, to 1,328 and the Nasdaq Composite dipped 15.7 points, or 0.56%, to 2,780. The FOX 50 traded  lower by 3.4 points to 934.

The blue chips managed to eke out a 0.3% gain on the week, while the Nasdaq and S&P 500 both lost 0.3%.  Trading was extremely light, with the major exchanges posting their lowest weekly volume of the year.

Traders were keeping a close eye on Capitol Hill where chances of lawmakers passing a budget to avert a looming government shutdown were quickly dwindling.  As of the close of markets Friday, a deal still hadn't been reached.

Oil prices have soared to 31-month highs amid concern tumult in Libya and several Middle Eastern nations could restrict worldwide supplies of oil. Indeed, Libya's Sarir oil field -- the largest in the country -- was on fire Friday, igniting fears about the OPEC-member's ability to get its production back online.

Security forces clashed with protesters in Syria Friday, killing at least fifteen people, according to a report by Reuters, citing statistics from a hospital. Syria is a modest producer of oil, but is located in a strategically important location for the transportation of energy, according to the U.S. Energy Department.

Light, sweet crude spiked $2.49, or 2.3%, to $112.79 a barrel. Prices at the pump continue climbing higher as commodity prices have jumped.  A gallon of regular gas costs $3.74 on average nationwide, up from $3.52 last month and $2.86 last year, according to the AAA Fuel Gauge Report.

Oil generally trades inversely to the U.S. dollar, which sunk 0.66% against a basket of world currencies, putting further upward pressure on prices.

Transportation issues like FedEx (NYSE:FDX) and Delta Airlines (NYSE:DAL) were slammed by rising energy prices Friday. Energy shares like ExxonMobil (NYSE:XOM) and ConocoPhillips (NYSE:COP) bucked the trend and edged higher on the day.

Expedia (NASDAQ:EXPE) revealed plans to spinoff its TripAdvisor unit into a separate, publicly traded company, sending shares higher by 13%. Google (NASDAQ:GOOG) also received permission from regulators to purchase ITA Software, which specializes in software for airlines.

The European Central Bank increased its key interest rates from a record low 1% to 1.25% on Thursday.  Many market participants see this as a sign the euro zone economy is able to recover without as much help from the government.

A key Federal Reserve official said Friday that while the U.S. economy is recovering, he doesn't see the Fed following the ECB's rate hike.

"With longer-term inflation expectations remaining stable -- and predicting that commodity price growth will stabilize -- my view is that current monetary policy is appropriate," said Dennis Lockhart, president of the Atlanta Federal Reserve Bank, in a speech.

Other Fed officials disagree, however.

"I see many risks of the Fed overstaying its welcome," said Richard Fisher, Dallas Federal Reserve Bank president. "No amount of further accommodation by the Fed would be wise."

Gold jumped $14.80, or 1%, to a record high of $1,474.

Corporate Movers

Johnson & Johnson (NYSE:JNJ) reached a $7.9 million settlement with U.K. regulators to end a U.K. bribery investigation.

Hercules Offshore (NASDAQ:HERO) is the subject of an investigation by the Justice Department and Securities and Exchange Commission, causing the drilling company's stock to plummet.

Apple's (NADAQ:AAPL) iPad, iPhone and iPod Touch customers will be able to access live streaming content from Walt Disney's (NYSE:DIS) ESPN sports channel through an App.

NXP Semiconductor (NASDAQ:NXPI) is in talks with Intel (NASDAQ:INTC), Qualcomm (NASDAQ:QCOM) and Broadcom (NADAQ:BRCM) about a possible takeover, according to a report by Dutch paper De Telegraaf. The company specializes in making chips for payments made using mobile phones, an increasingly talked about technology.

Pfizer's (NYSE:PFE) Sutent drug was found to show uncertain benefit in treating pancreatic cancer, according to the Food and Drug Administration.

Foreign Markets

Global shares gained as optimism over recovery in the euro zone economy overshadowed lingering concerns over Portugal's need for a European Union-supported bailout.

The English FTSE 100 was up 0.81% to 6,056, the French CAC 40 climbed 0.83% to 4,062 and the German DAX jumped 0.53% to 7,217.

In Asia, the Japanese Nikkei 225 soared 1.9% to 6,768 and the Chinese Hang Seng traded higher by 0.47% to 23,396.