Dow, S&P 500 in fourth weekly fall as economy weighs

By Edward Krudy

NEW YORK (Reuters) - The Dow industrials and the S&P 500 fell on Friday, dropping for the fourth straight week, after Chevron Corp (CVX.N) warned about its quarterly results and consumer confidence fell to it lowest level since March.

But the technology-heavy Nasdaq eked out a gain in light volume after Goldman Sachs upgraded the U.S. hardware and software sectors.

The news on Chevron and the U.S. consumer highlighted concerns that an economic recovery and corporate profits in the second-quarter may be weak. Oil prices continued to skid as U.S. oil futures fell below $60 a barrel. The drop heightened concerns that demand remains sluggish and prompted investors to sell some shares of energy companies.

"While there have been some positive developments, the overriding concern is that we're still in the middle of a recession," said Michael Cuggino, president and portfolio manager at Permanent Portfolio Funds in San Francisco.

"We've got deflationary indicators, commodity prices are coming back down, demand hasn't picked up, inventories are being worked off, (and) unemployment continues to pick up."

The S&P 500 rallied as much as nearly 40 percent from a 12-year closing low in early March, but the broad-based index is now off 7.1 percent from a peak on June 12. Some analysts are starting to anticipate a prolonged pullback in stock prices, especially if corporations disappoint investors as the

earnings season unfolds.

The Dow Jones industrial average .DJI dropped 36.65 points, or 0.45 percent, to 8,146.52. The Standard & Poor's 500 Index .SPX fell 3.55 points, or 0.40 percent, to 879.13. But the Nasdaq Composite Index .IXIC gained 3.48 points, or 0.20 percent, to 1,756.03.

For the week, the Dow slipped 1.6 percent, the S&P 500 fell 1.9 percent and the Nasdaq lost 2.3 percent.

Weighing on investors, U.S. consumer sentiment soured in early July, slipping to its weakest since March, when confidence in the financial sector and economy were at a low ebb, according to the Reuters/University of Michigan Surveys of Consumers.

Energy shares were the biggest losers in the S&P 500, pressured both by a drop in crude oil prices and after Chevron said that any benefit from higher oil prices would be largely offset by a weaker dollar in the second quarter. Chevron's stock fell 2.7 percent to $61.40 and was among the Dow's top percentage decliners.

The S&P Energy Index .GSPE dropped 1.1 percent.

August crude futures fell 52 cents, or 0.9 percent, to settle at $59.89 per barrel, falling for the seventh session in eight and marking the biggest weekly percentage loss since the week through January 30.

Goldman Sachs upgraded the U.S. hardware and software sectors to "attractive" from "neutral," citing potential growth in demand from businesses.

Among a series of other calls, Goldman raised its price target on the stock of Apple Inc (AAPL.O) to $160 from $145. Apple's shares jumped 1.6 percent to $138.52 and provided the top boost to the Nasdaq.