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Stocks Gain for Week, Led by Tech, Energy

Stocks finished flat as a new record for oil prices overshadowed a better-than-expected report on housing.

Still, for the week, all three major indexes managed decent gains. The Nasdaq led the pack, jumping 3.4 percent, as investors, increasing their appetite for risk, snapped up tech stocks. The Dow Jones Industrial Average gained 1.9 percent and the S&P 500 index advanced 2.7 percent.

Accounting for most of the Nasdaq's gains were Intel , up 7 percent this week, and Cisco , up 4 percent.

The S&P's gains this week were fueled by oil and tech, including ExxonMobil , Intel, AT&T , Chevron and Cisco.

The CBOE Volatility Index, or VIX, skidded nearly 15 percent, on top of last week's 14 percent slide, as market fears have noticably eased.

US light-sweet crude closed at a record $126.29 Friday but was well off its intraday record $127.82 after the Bush Administration agreed to suspend buying oil for the Strategic Petroleum Reserve for six months.

Crude oil has continued to quickly blast through the top of any new range it sets, gaining 24 percent in the past eight weeks.

Goldman Sachs, the most active brokerage in energy markets, on Friday raised its forecast for oil to hit $141 a barrel in the second half of this year. Goldman rattled the market less than two weeks ago, when it projected oil prices between $150 and $200 a barrel in the next two years.

In Friday's market action, Exxon and Chevron were the top two Dow gainers, followed by Hewlett-Packard, which recovered some ground after taking a beating earlier in the week over its proposed acquistion of IT-services firm EDS .

General Motors led Dow decliners, after leading advancers on Thursday, as the auto maker grapples with labor negotiations. A monthlong strike at a Michigan plant appeared to be nearing an end; one that began May 5 continued at a Kansas plant that makes the popular Chevy Malibu.

Financial stocks were some of the day's biggest decliners after Merrill Lynch downgraded regional banks KeyCorp and Regions Financial .

American Express and Citigroup dragged on the Dow.

Lehman Brothers tumbled amid news that long-anticpated layoffs at the brokerage are set to begin next week. The company is expected pare its workforce by 5 percent.

Some news swirling around Internet target Yahoo : Billionaire investor Carl Icahn is launching a proxy fight for Yahoo that could bring Microsoft back to the table. On Thursday, Icahn's move was backed by hedge fund Paulson & Co., which owns 50 million Yahoo shares. Meanwhile, reports suggested that Yahoo is still hoping to secure a search-advertising deal with Google, and could announce it in the next week.

Futures had pointed higher after a pre-market report showed housing starts jumped 8.2 percentin April but enthusiasm quickly faded after a separate report showed that consumer sentiment fell to a 28-year low this month.

The encouraging housing report comes a day after leaders of the U.S. Senate Banking Committee agreed to the underpinnings of a housing-rescue plan that will create a federal backstop for failing loans, Reuters reported.

The plan would create a $300 billion mortgage insurance fund administered by the Federal Housing Administration and a new regulator for Fannie Mae and Freddie Mac, the two largest sources of mortgage finance in the U.S.

Lockheed Martin won a potential $3.6 billion contract to start building a new generation of global positioning satellites that will boost accuracy for worldwide users, the Air Force said Thursday.

And Genentech said on Thursday a trial of Avastin in colon cancer patients who have undergone surgery will be completed earlier than expected due to faster collection of data and a higher-than-planned number of patients with stage III cancer.

An early look at cancer data, released by the American Society of Clinical Oncology late Thursday, left several analysts optimistic about growth prospects for Genentech's Avastin.

"We found several reasons to like Genentech," JP Morgan analyst Geoff Meacham said in a research note. Another analyst saw the potential for another $1.5 billion in annual Avastin sales.

Oil prices pushed retail stocks lower but there were a few bright spots from earnings that came in better than expected.

High-end retailer Nordstrom reported its profit slipped but beat expectations. However, the company lowered its outlook.

Teen retailer Abercrombie & Fitch reported earnings of 69 cents a share, surpassing forecasts, and backed its outlook for the second quarter.

Send comments to cindy.perman@nbcuni.com.

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