Stocks closed little-changed despite of a sharp drop in oil prices that boosted shares of big manufacturers such as Boeing.
Data showing modest job growth in November helped ease fears of a recession, but it restrained the broader market as it cooled somewhat investors' expectation for a sharp rate reduction next week.
The Dow Jones Industrial Average closed Friday at 13,625.58, up 5.69, or 0.04 percent. The Nasdaq Composite closed at 2,706.16, down 2.87, or 0.11 percent, while the S&P 500 declined to 1,504.66, a loss of 2.68, or 0.18 percent.
For the week, the Dow ended up 253.86 or 1.90 percent, the Nasdaq rose 45.20 or 1.70 percent, and the S&P 500 ended up 23.52 or 1.59 percent.
Investors had been hopeful that the Federal Reserve was leaning toward cutting short-term rates by a half percentage point to rescue a sinking economy after recent comments by Fed officials.
But a report Friday from the Labor Department report showed U.S. employers added 94,000 jobs last month, slightly above forecasts by Wall Street analysts and a moderately positive sign for the economy.
"The jobs report was a Goldilocks report," said Steven Sheldon, president of SMS Capital Management, in Houston.
Wall Street widely expects the policy-makers to cut the benchmark interest-rate target by at least 25 basis points to 4.25 percent when it meets on Tuesday, with some even looking toward a 50-basis-point cut.
"The labor report suggests sufficient strength in the economy that it doesn't really look like extraordinary efforts are really necessary at this point," said Brian Gendreau, investment strategist at ING Investment Management in New York. "They can do 25 now and do another 25 later."
Investors, meanwhile, are also still sifting through thedetails of a plan outlined yesterdayby President Bush and Treasury Secretary Henry Paulson to help thousands of homeowners cope with the subprime mortgages crisis.
A Reuters survey on Friday of 17 U.S. primary dealiers, the firms that trade directly with the Fed, showed that all of them now expect the central bank to cut the benchmark fed funds rate for overnight bank loans by 25 basis points on Tuesday. That forecast was unchanged from a week ago.
The credit situation is expected to weigh heavily in the Fed's decision.
"We're probably facing a fairly significant slowdown in Q1 of '08 and the Fed's got to try to stay ahead of that," said Steve Sachs, director of trading at Rockville, Md.-based Rydex Investments. "I'm not sure that they can at this point, but my bet is 50 basis points and I think that equities will continue to have at least a bid to them as we get to and through that meeting on Tuesday."
Treasury bond prices slippedwhen the jobs numbers showed a more robust employment market than analysts had anticipated.
In other economic news, consumer sentiment souredfor a third month in early December as real estate troubles and expensive gasoline left consumers at their gloomiest since the aftermath of Hurricane Katrina.
In the tech sector, Palm dropped sharply Friday, after warning Thursday afternoon that it would post a fiscal second-quarter loss and revenue will be short of its target because of a delayed product shipment, an increase in repair expenses and a changing product mix.
Joining Palm in steep moves to the downside were Capital One , which suffered an analyst downgrade, and gun maker Smith and Wesson, which lowered guidance for the second time in two weeks.
Also on the Nasdaq, shares tumbled at both Gemstar-TV Guide and Macrovision after the two announced Macrovision had agreed to acquire Gemstar in a dealvalued at about $2.8 billion.
American Express was the biggest of the Dow drags, falling on analyst downgrades, while 3M was the biggest gainer of the blue-chips.
Also on the plus side, IMAX shares hit a 12-month high on news that the giant-screen movie-maker signed a 100-theater dealto install digital projection systems at AMC Entertainment multiplex theaters.
Oil gave back Thursday's gains, falling below $88 a barrel as trading remained volatile over uncertainty in demand from US and Chinese consumers and supply from OPEC nations.