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Stocks Wobble as Confidence Boost Fades

Stocks had a wobbly start to the morning Friday as investors weighed some encouraging economic reports against gloomy earnings.

Major continental European markets were closed Friday for the May Day holiday. UK markets will be shuttered Monday for a bank holiday.

Stocks ended flatThursday after President Obama said Chrysler will file for bankruptcy protection, quashing earlier gains.

Banks were mixed ahead of the stress-test results, due out next Thursday.

Citigroup and Bank of America were higher, while JPMorgan, Chrysler's biggest lender, declined.

General Motors and Ford declined.

McDonald's was one of the biggest drags on the Dow after Goldman Sachs removed the stock from its "conviction buy" list following its recent runup.

Consumer confidence soared in Aprilto its highest level since the September failure of Lehman Brothers, according to the Reuters/University of Michigan final reading for April. It also marked the first year-over-year increase in the indicator since July 2007.

Adding to the hope-stirring economic news, the Institute for Supply Management reported its gauge of the manufacturing index jumped to 40.1 in April from 36.3 in March. The index is still under 50, which indicates the sector is in contraction mode, but it's clawing its way back toward that benchmark—expansion.

"This is definitely a good start for the second quarter," Norbert J. Ore, chair of ISM survey committee said in a statement. Still, he said, the sector isn't out of the woods yet. "While this is a big step forward, there is still a large gap that must be closed before manufacturing begins to grow once again. The Customers' Inventories Index indicates that channels are paring inventories to acceptable levels after reporting inventories as 'too high' for eight consecutive months."

Factory orders dropped 0.9 percent in March after a downwardly-revised 0.7-percent increase in February. That number had initially been reported as a 1.8-percent gain and provided hope that manufacturing may be recovering.

Traders have been encouraged by glimmers of hope in the economic reports this week, including the drop in jobless claims Thursday and the paring of inventories in the GDP report Wednesday, which was interpreted as a sign that a build in inventories may be coming.

In earnings news, MasterCard shares fell 10 percent after the credit-card maker beat estimates but said 2009 revenue will miss its targetamid a drop in consumer credit-card use.

Hartford Investment Group reported a first-quarter loss of $1.21 billion or $3.77 a share, worse than expectations of $3.05 a share. The fourth biggest U.S. insurer said it was closing most of its operations in Britain, Ireland and Germany as part of a pullback from Europe.

U.S. oil titan Chevron reported its earnings tumbled 64 percent, hit by the drop in oil prices.

On the plus side, DryShips posted earnings of 36 cents a share, nearly double the 19 cents that Wall Street expected.

Citadel Investment Group is reportedly expanding into investment banking and has hired three ex-Merrill Lynch executives to head up the new operation, according to a Reuters source late Thursday.

Meanwhile, Mexico began shutting down its businessesin an effort to slow the spread of a new swine flu strain as more cases were found in the U.S. and officials urged increased worldwide precautions against a possible pandemic.

The World Health Organization Friday said the number of officially confirmed cases of the new flu was 331 in 11 countries, including 10 deaths.

In the U.S., Johnson & Johnson said it was ramping up production of its Purell hand sanitizer.

Health officials have encouraged the use of alcohol-based sanitizers as a way of preventing the spread of swine flu.

Still to Come:

FRIDAY: Auto sales; Fed's Geithner, Bullard speak; Reuters/Univ of Mich consumer confidence; ISM manufacturing index; factory orders; Earnings from Chevron, Clorox, MasterCard and Simon Property

Send comments to cindy.perman@nbcuni.com.