Stocks Wobble as Rally Can't Find Legs

Stocks wavered Friday as banks tried to rebound and Google and Microsoft slammed techs.

Citigroup reported a smaller-than-expected $2.5 billion loss for the second quarter, prompting at least one analyst to say "the worst may be over in the subprime mess."

Financials waffled throughout the day, but were on track for a  solid week, with Lehman Brothers up 33 percent for the week, And Bank of America , Wells Fargo , JPMorgan and Citigroup all up mor ethan 20 percent.

Some market pros said this is a perfect time to get into the market.

"We have seen the most incredible, overwhelming amount of negative everything – it’s the end of the world," Bill Spiropoulos, CEO of CoreStates Capital Advisors, told CNBC. "This is the time for advisors and client alike to have ice in your veins, clear thought, high testosterone and put money to work now."

Google and Microsoft were the biggest drag on major indexes Friday after the companies' outlooks punctured the notion that these pillars of tech were immune to the economic slump.

The tech-heavy Nasdaq refused to partake in the turnaround, remaining down more than 1 percent. The Dow Jones Industrial Average and S&P 500 index vacillated between positive and negative territory.

The Nasdaq and S&P struggled in the final hours of trading not to spend a third straight weekend in bear-market territory.

(Has the U.S. recession reached Silicon Valley? Click on the video at left.)

There was some encouraging news from the tech sector: IBM beat earnings expectations as strong demand overseas for its software and services juiced revenue and Nokia , the world's biggest handset maker, offered an optimistic outlook for the rest of the year.

Merrill Lynch, which has been among the hardest hit by the credit crunch, reported a $4.9 billion loss -- more than double what analysts had expected and one of the worst in the investment bank's history. Merrill also said it is close to selling $8 billion of assets in a bid to raise fresh capital.

With nearly one-fifth of S&P 500 companies reporting, analysts expect second-quarter earnings for the 500 to drop 17.1 percent, Thomson Reuters reports, down from its prior estimate of 16.1 percent.

Meanwhile, Freddie Mac was rumored to be readying to sell as much as $10 billion in new shares, having taken the first step by registering with the SEC.

Freddie and Fannie Mae have enjoyed a wild rally this week, which, if it holds, would snap an eight-week losing streak. The government on Sunday launched a rescue plan of the pair, assuring investors they would buy back stock if necessary and promising to raise the limit on government guarantees on their debt.

Together, Fannie and Freddie finance about half of U.S. homes, making their stability essential to stabilizing the housing market.

As consumers get pummeled by housing crisis and soaring prices at the pump, a survey by Reuters and the University of Michigan offered a striking revelation: More than half of consumers polled said they plan to accelerate paying off their debt and save more in the year ahead.

The numbers are backing that up: A government gauge of aggregate savings jumped to 5 percent in May, the biggest since March 1995, and the Fed's measure of household indebtedness versus income dropped to 14.13 in the first quarter, the lowest in two years.

It's a solid sign that individuals are getting their house in order but with consumers accounting for two-thirds of economic activity, it means a deepening slump for the  economy in the second half of the year and in early 2009.

General Motors shares rose more than 1 percent as oil prices receded.

Light, sweet crude finished the week at $128.88 a barrel