American Express lifts Dow and S&P; Nasdaq dips

By Caroline Valetkevitch

NEW YORK (Reuters) - The Dow and S&P rose on Friday, after signs that American Express Co (AXP.N: Quote, Profile, Research, Stock Buzz) was holding its own amid the economic slowdown, but Microsoft Corp's (MSFT.O: Quote, Profile, Research, Stock Buzz) 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.