Oil prices, budget stalemate weigh down stock market

A surge in oil prices and the threat of a government shutdown weighed on stocks Friday.

Investors kept one eye on Washington, where Republicans and Democrats were in the final day of talks to reach a budget agreement. Without a deal, the federal government is expected to stop all services that aren’t considered essential. That means most economic reports would be suspended.

Benchmark crude oil jumped $2.49 to settle at $112.79 per barrel on the New York Mercantile Exchange. That’s the highest price since Sept. 22, 2008.

Over the past two months, most stocks have fallen following large jumps in oil prices as investors worried that higher transportation costs would cut into company margins and consumer spending.

The Dow Jones industrial average lost 29.44 points, or 0.2 percent, to close at 12,380.05. The Standard & Poor’s 500 index slipped 5.34, or 0.4 percent, to 1,328.17. The Nasdaq composite lost 15.72, or 0.6 percent, to 2,780.42.

The Dow ended the week flat, while the S&P and Nasdaq lost 0.3 percent. All three indexes made gains in the previous two weeks.

Johnson & Johnson settles civil and criminal charges

Health care giant Johnson & Johnson has agreed to pay $70 million to settle civil and criminal charges of bribing doctors in Europe and paying kickbacks to the Iraqi government to illegally obtain business.

The Securities and Exchange Commission said Friday that the company settled the charges with the agency and the Justice Department without admitting or denying guilt.

The government accused J&J subsidiaries of providing money and travel gifts to doctors in Greece, Poland and Romania in exchange for their prescribing J&J products to patients. The SEC says J&J agents used fake contracts and sham companies to deliver the bribes. The SEC says the bribes began at least 13 years ago.

J&J subsidiaries also allegedly paid kickbacks to the Iraqi government to obtain contracts under the United Nations Oil for Food Program.

Politics complicates efforts to aid Portugal with loans

Europe’s top financial officials said Friday that Portugal will need around $114 billion in rescue loans, but a tense election campaign is set to complicate reaching a deal with opposing political parties.

A full-fledged adjustment program should be in place by mid-May, allowing the country to meet huge bond repayments in June, said Olli Rehn, the EU’s monetary affairs commissioner.

Rehn said all major political parties would have to agree to the program to ensure that it will be implemented after June elections, which will likely heave the opposition into power.

International Monetary Fund Director Dominique Strauss-Kahn said Friday that IMF had received a request for financial assistance from the Portuguese authorities and was prepared to move “expeditiously” and hold “swift discussions” with the government.

However, Portugal’s acting finance minister, Fernando Teixeira dos Santos, quickly thwarted hopes of cooperation between the opposing political forces, saying the caretaker government will not talk directly to the opposition and that any talks would have to be led by the European authorities and the IMF instead.

Rising demand for corn takes reserves to low point

Rising demand for corn from ethanol producers is pushing U.S. reserves to the lowest point in 15 years, a trend that could lead to higher grain and food prices this year.

The Agriculture Department on Friday left its estimate for corn reserves unchanged from the previous month. The reserves are projected to fall to 675 million bushels in late August, when the harvest begins, or roughly 5 percent of all corn consumed in the United States. That would be the lowest surplus level since 1996.

The limited supply is chiefly because of increasing demand from ethanol makers, which rose 1 percent to 5 billion bushels. That’s about 40 percent of the total crop.

But the increase didn’t alter the agency’s overall estimate, mostly because livestock producers are expected to scale back corn purchases.