Stocks rose for a third straight week as investors got their game on for a recovery. Still, Friday's trading was choppy as investors cheered an early pop from the smaller-than-expected job loss in May but the market couldn't sustain the gains.
Major indexes finished mixed: The Dow Jones Industrial Average eked out a gain of 0.2 percent to finish at 8,763.13. The S&P 500 shed 0.3 percent and the Nasdaq finished flat.
But all three major indexes finished up for the third week in a row. The Dow gained 3.1 percent for the week, while the Nasdaq added 4.2 percent and the S&P rose 2.3 percent.
Ten out of 10 key S&P sectors finished the week higher, led by industrials, which gained 5.7 percent, information technology and consumer discretionary. The bottom there were telecoms on the bottom rung, followed by health care and financials.
Crude ended the week at $68.44 a barrel after topping $70, a seven-month high, in intraday trading.
Nonfarm employers cut payrolls by 345,000last month, well below the 525,000-drop expected. And, the previous month was revised to show fewer jobs were lost than initially reported. The unemployment rate, however, jumped to 9.4 percent, the highest since August 1983 and higher than the 9.2 percent expected.
"Forget the unemployment rate—it lags," wrote Robert Brusca, an economists at Fact and Opinion Economics, in a morning note to clients. "Jobs are doing what they do at end recessions and in early recoveries ... Job gains by the fourth quarter—believe it," he said.
The news initially gave stocks a boost but that faded within the first hour of trading and stocks bounced around for the rest of the day.
Traders "are very concerned how nonfarm payrolls can be down and unemployment high," said Mark McLain, managing director of trading at Ladenburg Thalmann. Plus, the last couple of days, there's been a sentiment change in the market, McLain explained, as traders take a step back after running up amid dismal economic data.
"If we continue to run on better-than-bad, we're going to create a scenario where good may not be good enough," said Michael Kresh, president of M.D. Kresh Financial Services in Islandia, N.Y.
Meanwhile, borrowing by consumers fell by $15.7 billion in April — the second largest drop on record — as more people are cutting back on spending and squirreling away their money.
And mortgage rates ticked ever higher: The overnight rate on the 30-year fixed ticked up to 5.46 percentfrom 5.27 percent last week, according to BankRate.com.
Citigroup shed 3.1 percent following a report that the FDIC is mulling a shake-up of the bank's top management, including the ouster of CEO Vikram Pandit.
Other financials finished mixed: Bank of America and JPMorgan ended lower, while State Street and Fifth Third gained.
General Motors gained 16 percent following news that the automaker has agreed to sell its Saturn division to Penske Automotive Group.
GM is also expected to provide more than $2.5 billion of the $3.6 billion Platinum Equity needs to take control of auto-parts supplier Delphi, the Wall Street Journal reported.
Fiat got the green light from a federal appeals court to acquire Chrysler. Still, a group of investors are expected to appeal the decision to the Supreme Court.
For the week, auto stocks fared pretty well, Ford gained nearly 11 percent and GM ended up more than 15 percent, after automakers turned in better-than-expected May sales results.
Remember, next week: GM and Citi are out of the Dow, to be replaced by Cisco and Travelers , starting Monday.
Wal-Mart ended slightly higher after the discount giant announced a $15 billion stock-repurchase plan.
It wasn't one of retailers finer weeks: Analysts had expected greater things from the sector amid all this talk about a recovery, but May sales were a disappointment.
In Friday's trading, DuPont was the biggest percentage decliner on the Dow, falling 6 percent, after Bank of America and Merrill Lynch downgraded their ratings on the stock to "underperform"/"underweight," amid concerns that include patent expirations and rising crude prices.
Also dragging on the Dow was Merck after the pharmaceutical company's heart-failure drug, rolofylline, failed a late-stage study.
Chips took a hit following a report that chip sales are expected to fall 21 percent worldwidethis year. The Philadelphia Stock Exchange semiconductor index shed 1.9 percent.
Applied Materials skidded 4.9 percent after the CEO of the chip-equipment maker was quoted as saying there are no signs of a recovery in demand in the global chip market and Citigroup slashed its rating on the stock to "hold" from "buy."
Apple shares gained 0.7 percent following news that CEO Steve Jobs would take back the reinslater this month. Jobs took a leave in January as he battled pancreating cancer.
And Palm hit a 52-week high today at $14.14 amid rave reviews for its new smartphone, the Pre, to be released on Saturday. The stock rose 6.6 percent this week, but is up a whopping 323 percent for the year.
Rumblings about tech deals picked up this week: Intel agreed to buy Wind River Systems for $844 million and EMC and NetApp are in a $2 billion bidding war over Data Domain .
Rio Tinto shares shot up 11 percent, and helped mining stocks lead Europe, after the miner scrapped a proposed deal with China's Chinalco by combining its iron ore operations with BHP Billiton.
AIG priced a secondary public offering of Transatlantic Holdings at $38 each as the insurer prepares to shed assets to repay a government loan package with $180 billion.
Transatlantic shares rose 2.7 percent. AIG gained 4.3 percent.
And regional bank Keycorp fell 1.3 percent after RBC upgraded the stock to "top pick" from "sector perform."
Next week is fairly light on the earnings and economic data front: Reports are due on international trade, the Treasury budget, retail sales and consumer sentiment, as well as earnings from National Semiconductor.
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