Despite a failed attempt at the end of Friday's session to close the session out on a positive note, stocks finished higher for the week on some tepid signs of recovery for the US economy.
Wall Street pushed past the overhang of the Wall Street debt crisis, though Friday was a negative day.
The Dow was modestly lower but the S&P 500 posted losses approaching 1 percent, while the late-day selloff pushed the Nasdaq tech gauge down past 1 percent.
Overall, the market gained about 2 percent on the week.
A European summit over the weekend that is aimed to support the region's sickly financial sector, giving some hope as well for the market.
Home Depot and Wal-Mart led the blue-chip gainers, while BofA and JPMorgan lagged.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded above 36.
Six of 10 S&P sectors were lower, with losses led by financials and materials.
Fitch slashed Spain's rating to AA- from AA+, citing risks of slow growth and high regional debt, and Italy's to A+ from AA-, adding the outlook on its long-term ratings is negative.
Italy's downgrade follows an earlier cut this week by Moody's.
Moody’s also downgraded 12 UK financial institutions, saying it sees a decreased likelihood of government support for smaller institutions in particular but specifying the move does not reflect a deterioration in the financial strength of the banking system.
Meanwhile, German Chancellor Angela Merkel and French President Nicolas Sarkozy were split ahead of crucial summit talks over the weekend over the usage of the EFSF.
The latest developments in the euro zone put pressure on U.S. financials such as Goldman Sachs and Morgan Stanley. Citigroup also slumped after Raymond James cut its price target on the firm to $43 from $65.
On the economic front, the monthly non-farm payrolls number grew more than expected in September, jumping 103,000 in September, but the unemployment rate remained steady at 9.1 percent, according to the Labor Department. Economists polled by Reuters expected a total of 60,000 jobs to have been created.
"It's difficult to spin this number as the start of an improving trend and reassure Americans the worse is behind us," said Todd Schoenberger, managing principal of The BlackBay Group. "The numbers may have beaten consensus but remain horrific and shouldn't be a tremendous surprise to Americans considering the troubling economic environment and a focus by companies to do whatever it takes to turn a profit."
Concerns over the euro zone crisis have hit the market hard in recent months, along with fears about the slowing economic growth in the U.S. and China.
“You’re seeing a pattern of lower highs dating back to late August—it’s technical-related selling,” said Todd Salamone, director of research for Schaeffer's Investment Research. “There’s a lot of sideline money—we’re seeing the lowest allocation in equities that’s even below March 2009 levels.
“There has to be a reason for investors to feel that they’re missing something, but we’re still negative year-to-date and there’s a lot of uncertainties,” noted Salamone.
On the tech front, pre-orders have startedfor the Apple iPhone 4S with deliveries beginning on Oct. 14. The newest iPhones are scheduled to be in stores by Oct. 15.
Sprint said it will stop selling phones and devices compatible with Clearwire's network at the end of the year as the company plans to upgrade its network. Clearwire plunged almost 20 percent following the news after the shares were halted five times.
Meanwhile, Sprint declined to detail its commitments to Apple for selling the iPhone and said its financial forecast does not include iPhone costs. Sprint shares, which initially jumped more than 10 percent, were halted and fell sharply when they resumed trading amid the uncertainty shrouding the firm.
Oracle agreed to pay almost $200 millionto settle allegations that the company failed to tell the General Services Administration about discounts and commercial sales practices involving other customers, according to the Justice Department.
And Sony is in talks to buy out Ericsson's stake in their mobile phone joint venture, in an aim to catch up with rivals.
Meanwhile, Walt Disney
Illumina tanked more than 30 percent after the maker of genetic analysis tools forecast a weak third quarter on uncertainty related to research funding. Rivals BrukerBioSciences and Thermo Fisher were also sharply lower.
Investors are gearing up for third-quarter earnings, which will kick off with Alcoa's results after-the-bell next Tuesday. PepsiCo , JPMorgan and Google are among other major companies slated to report next week.
Wholesale inventories edged up 0.4 percent in August, according to the Commerce Department. Economists had expected a gain of 0.7 percent, according to a Reuters poll.
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On Tap Next Week:
MONDAY: Columbus Day—Markets open, banks closed
TUESDAY: NFIB small biz optimism index, 3-yr note auction, FOMC minutes, P&G shareholder mtg; Earnings from Alcoa, interim results from Chevron
WEDNESDAY: Weekly mortgage apps, 10-yr note auction, Fed's Plosser speaks, Fed's Pianalto speaks, Oracle shareholders mtg; Earnings from PepsiCo
THURSDAY: International trade, jobless claims, oil inventories, 30-yr bond auction, Fed's Kocherlakota speaks; Earnings from JPMorgan, Google
FRIDAY: Retail sales, import/export sales, consumer sentiment, business inventories, new iPhones available; Earnings from Mattel
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