Stocks staged a late-day rally Friday, pushing the Dow to a positive close, after a report that a major UK bank has reached an asset-protection deal with the government.
Stocks got a quick pop at the open an on-target payrolls report but then slid downhill for the rest of the session, taking more safety stocks with it, until this rally in the final half hour of trading.
The Dow Jones Industrial Average ended up 0.5 percent at about 6,620, clawing back from a 12-year low below 6,500 intraday.
The S&P 500 snuck into positive territory as things were settling, though still finished below 700. The Nasdaq ended lower. Both indexes logged their worst weeks since November.
The Dow finished above 7,000 last Friday, leaving it down more than 400 points, or 6.2 percent, for the week.
The CBOE Volatility Index, considered the best gauge of fear in the market, ended just shy of the 50 mark, up about four points for the week.
It was another wild week on Wall Street: Stocks started the week at 12-year lows, the worst start to March ever, as investors were rattled by news of another bailout for AIG and questions about GM's viability. On Tuesday, the Fed and Treasury launched the TALF, a $200 billion credit infusion aimed at loosening the availability of credit for consumers and small businesses. That gave a boost to American Express that day as investors hoped the plan would help ease the credit-card company's pain but the rest of the week was downhill for the stock, leaving it just above the $10 mark.
A slew of other former "safety" stocks plumbed new lows as well: Citigroup briefly dropped below $1, Bank of America hovered just above the $3 mark, General Electric fell below $7 and General Motors was below $1.50.
The late-day market-moving news Friday was that Lloyds Banking Group reached a deal with the UK government for an asset-protection plan of about 250 billion pounds(US$353 billion), according to a report from the Wall Street Journal. The deal also increases the UK's stake in the bank to 75 percent.
The early pop came from the February jobs report: Employers clipped 651,000 jobsfrom nonfarm payrolls last month, on par with expectations, though the prior two months were revised to show many more jobs were lost than previously thought. The unemployment rate hit a 25-year high of 8.1 percent, much worse than expected.
"The actual [payrolls] number was better than expected and may indicate that we're near an end to the downtrend of that unemployment number," said Ken Homan, senior portfolio manager at Springfield Trust & Investment in Springfield, Mo.
But the market remains preoccupied with what's going on in Washington, Homan said.
"Weighing heavily on the market are fears that the stimulus initiatives ... aren't going to work," Homan said, and that there will be long-term consequences. Investors are worried that there's "too much money being poured into the economy, which will affect our inflation and potentially put a cap on the economy for several years."
The latest government rescue of AIG was, in part, a bid to protect banks in Europe, Rep. Paul Kanjorski (D-Pa.) said. If AIG failed, it “would have precipitated the failure of the European banking system,” Kanjorski said.
Merrill Lynch has sued Deutsche Bank for what it calls a hiring “raid.” Merrill, now part of Bank of America lost its treasurer Eric Heaton and 11 bankers to the German rival.
And Citigroup is reportedly looking to sell its stake in Japanese online brokerMonex Group in an attempt to raise cash, according to Yomiuri newspaper.
Citi was a high-profile casualty of Thursday’s widespread stock-market declines. The once giant Wall Street bank ended Thursday just above $1 a share, marking an 85 percent fall in this year alone.
Wells Fargo shares gained 6 percent today after the bank cut its dividend to five cents from 34 cents.
Apple fell 4 percent after JPMorgan cut its price target and earnings target for the iPod and iPhone maker.
Other techs also tumbled, with sharp drops in Research in Motion , Palm and Micron Technology .
H&R Block gained 8 percent after the tax preparer posted a higher quarterly profit which it attributed to a hike in fees for tax preparation. The profit of 20 cents per share easily beat analyst estimates of 9 cents.