US stocks ended higher on Friday after upgrades of Exxon Mobil Corp and Intel Corp boosted the Dow, while a drop in oil prices cushioned the blow of a monthly indicator showing consumer sentiment at its lowest level in 13 years.
Meanwhile, Deutsche Bank raised its rating on Dow-component Exxon Mobil to "buy" from "hold," saying oil supplies are likely to remain tight over the coming year. Exxon Mobil shares climbed 2 percent to $63.70.
Other oil shares gained on Exxon's upgrade. Chevron Corp rose 1.5 percent to $63.38 and ConocoPhillipps added 2.4 percent to close at $69.15.
Crude oil futures, which hit record levels after Hurricane Katrina, dropped $1.70 to $63.05 per barrel and helped fuel the broader market. Oil fell after the government said the hurricane did not cause major damage to underwater pipelines in the Gulf of Mexico.
The Dow Jones industrial average ended up 83.19 points, or 0.79 percent, at 10,641.94. The Standard & Poor's 500 Index closed 10.18 points higher, or 0.83 percent, at 1,237.91. The technology-laced Nasdaq Composite Index rose 14.20 points, or 0.66 percent, to 2,160.35.
For the week, all three indexes ended lower with the Dow down 0.34 percent, the S&P down 0.3 percent and the Nasdaq down 0.7 percent. "Energy has been pretty darn strong even with the price of crude down," said Jon Brorson, managing director of growth equities at Neuberger Berman in Chicago. "In fact, the only real negative sector is consumer discretionary, because of the horrendous consumer sentiment numbers."
Retail stocks traded lower following a sharp decline in US consumer confidence. The University of Michigan's consumer sentiment index fell to a 13-year low of 76.9 in early September from 89.1 in August, far below Wall Street forecasts.
The world's No 1 retailer Wal-Mart Stores Inc fell 1 percent to $43.87, while blue chip home improvement chain Home Depot Inc slipped 1.1 percent to $39.90.
Credit Suisse First Boston upgraded Intel to "neutral" from "underperform." The company's shares rose 1.1 percent to $24.81.
The Federal Reserve's policy-setting committee meets next Tuesday. Analysts widely expect the Fed to increase its benchmark borrowing rate by a 0.25 percentage point, but investors will be watching for any signs that the Fed may pause for one of its remaining three meetings this year if the aftermath of Katrina slows the economy.
However, a rise in US benchmark gold futures on Friday to a 17-year high of $463.30 an ounce may signal that the Fed does not have room to back down on rate increases.
"Gold is very sensitive to inflation," said Brorson. "If you're worried about inflation, you tend to see gains in gold."
Earlier in the session, market sentiment was buoyed by the prospect of business opportunities following President George W. Bush's pledge of extensive federal aid to help rebuild areas along the US Gulf Coast that were damaged by Katrina.
Shares of Adobe Systems Inc were up 9.4 percent at $29.43, making it the top gainer on Nasdaq. The software maker reported better-than-expected quarterly results after Thursday's market close.
Volume was more active than normal as four types of September futures and options contracts expired in an event known as "quadruple witching," coinciding with the rebalancing of the S&P index. Investors tend to spruce up portfolios or exercise derivative positions on such days.
Trading was heavy on the New York Stock Exchange, with about 2.55 billion shares changing hands, far above last year's daily average of 1.46 billion, while on Nasdaq, about 2.26 billion shares traded, beating last year's daily average of 1.81 billion.
Advancing stocks outnumbered declining ones by a ratio of 3 to 2 on both the NYSE and by 5 to 3 on the Nasdaq.