Stocks pared gains Friday afternoon as investors worries about the economy after this week's mixed reports.
Stocks have been positive for much of the day after a GDP surprise and encouraging reading on manufacturing.
Gross domestic product contracted at 1 percent annual rate, the Commerce Department said in its first read on the second quarter.
The headline number beat economists' expectations of a 1.4-percent decline, but the market had been anticipating that in the past few days and rallied on the rumor. So, initially today, there was some selling on the news. Plus, the prior two months, which had already been showing pretty severe declines, were revised lower, so there was some selling on that.
There was some encouraging news on the manufacturing front: A Chicago group said manufacturing activity had picked up in the region in July, and in fact, was its best reading since September.
This came after stocks rallied Thursday, logging their highest close since November. Japan's Nikkei closed at a 10-year-high Friday.
Meanwhile, the Obama administration announced this morning that it won't be suspending its "cash for clunkers" program.
According to some rough math, the clunkers program could bring July car sales to an annual rate of more than 12 million, which would be a 27 percent increase and the highest sales since September.
Kurt Karl, chief economist at Swiss Re in New York, said he thinks the program could even turn third-quarter GDP positive.
"That's big enough with production and sales to give a solid punch to the third quarter," Karl explained. "That would take my slightly negative [projection] and take it to the definitely positive area."
Ford continued to rally toward $8 after the announcement. Ford had said earlier in the week that it had seen a "dramatic" boost from the program.
For is apparently also slowing down the bidding process for its Volvo unit, according to a report in the Wall Street Journal today, hoping for a better price.
Bank of America was the biggest percentage gainer on the Dow following news thatthe bank plans to open a Chinese subsidiary.
Disney was the biggest drag on the Dow as the entertainment giant after the bell Thursday beat earnings forecastsbut fell short of revenue expectations.
Chevron shares skidded after the oil giant missed its earnings target as revenue was cut in half by the sharp drop in oil prices.
This followed similar results this week from ExxonMobil, Royal Dutch Shell, ConocoPhillips and BP earlier in the week.
AIG is still showing signs of weakness, despite getting one of the biggest bailouts in history.
And UBS advanced after the Swiss bank reached an agreement with the U.S.in a tax-evasion dispute.
General Electric continued to benefit from a Goldman Sachs upgrade based on the belief that the CNBC parent will not have to split off its GE Capital financing arm. GE shares gained 1.3 percent in premarket trading.
— Jeff Cox and Steve Liesman contributed to this report.
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