American Express lifts Dow and S&P; Nasdaq dips

The Dow and S&P rose on Friday, after signs that American Express Co was holding its own amid the economic slowdown, but Microsoft Corp's weak profit forecast pulled down the Nasdaq.

American Express said its quarterly profit fell, but the results beat expectations and the company affirmed its full-year earnings forecast, lifting its shares 5.7 percent and helping to boost the Dow.

The three major indexes ended Friday at their highest closing levels since January, continuing a rally started in mid-March after the Federal Reserve pumped cash into the financial system following the collapse of Bear Stearns.

But Microsoft weighed on indexes on Friday after it reported weak Windows software sales and a below-target profit forecast a day earlier, driving the software maker's shares down 6.2 percent.

Higher oil prices underpinned the market's rise by lifting shares of oil services companies nearly 2 percent after a cargo ship chartered by the U.S. military fired warning shots at two small boats in the Gulf.

American Express' results suggested that while many U.S. consumers may be hit by the credit crisis, upscale consumers have been unscathed, said Victor Pugliese, director of listed equity trading at Broadpoint Securities in San Francisco.

"Maybe the economy isn't as bad as people think," Pugliese said, but he acknowledged: "People are looking for good news."

The Dow Jones industrial average <.DJI> rose 42.91 points, or 0.33 percent, to end at 12,891.86. The Standard & Poor's 500 Index <.SPX> gained 9.02 points, or 0.65 percent, to 1,397.84. But the Nasdaq Composite Index <.IXIC> fell 5.99 points, or 0.25 percent, to 2,422.93.

For the week, the Dow ended up 0.3 percent, the S&P gained 0.5 percent and the Nasdaq rose 0.8 percent.

GOODYEAR GAINS, BUT 3M DROPS

Also on the plus side were shares of Goodyear Tire & Rubber Co , which rose 6.1 percent to $28.91, after the company posted stronger-than-expected quarterly profit driven by price hikes, sales of more expensive tires and favorable foreign-exchange rates.

Stocks turned lower shortly after the opening after a survey showed U.S. consumer confidence at its weakest point in 26 years in April.

U.S. consumer confidence fell for a third straight month in April on heightened worries over inflation and the sagging housing market, according to a survey by The Reuters/University of Michigan Surveys of Consumers.

The market reversed course later in the day, with financials leading the way higher. An index of financial shares <.GSPF> rose 1.7 percent, while American Express gained $2.59 to $47.77.

Also advancing was the Philadelphia stock exchange oil service index <.OSX>, up 1.8 percent. On the New York Mercantile Exchange, June crude rose $2.46, or 2.12 percent, to settle at $118.52 a barrel.

Limiting the Dow's advance was diversified manufacturer 3M Co , whose shares fell 1.7 percent to $77.82 and exerted the heaviest weight on the blue-chip average. The stock fell a day after the company reported stronger-than-expected quarterly profit but backed away from a previous target of 5 percent to 8 percent in volume growth this year, excluding the effect of the weak dollar.

Microsoft fell $1.97 to $29.83 on the Nasdaq. The stock's decline also helped to limit the gains of both the Dow and the S&P 500.

Trading was low on the New York Stock Exchange, with about 1.28 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.00 billion shares traded, also below last year's daily average of 2.17 billion.

Advancing stocks outnumbered declining ones on the NYSE by 5 to 3 and on Nasdaq by 4 to 3.