The Dow pulled off a modest gain Friday, capping a rocky week — and month.
Stocks had been positive for much of the day after a GDP surprise and encouraging reading on manufacturing, but it got a little crazy in the final half hour of trading, with the Dow threatening to tip into negative territory.
The Dow ended up 17.15, or 0.2 percent, to close at 9,171.61. The S&P rose 0.1 percent, while the Nasdaq fell 0.3 percent.
For the week, the Dow gained 0.9 percent, helping bring the blue-chip index its best July since 1989.
It was an eventful week for stocks: On Thursday, key indexes reach their highest closing levels since November, when the downturn began. More than $200 billion in Treasurys were auctioned, most of which were met with tepid demand. M&A activity started to pick up in the tech sector and Microsoft and Yahoo finally reached a search deal after months of flirting and bickering. It was a big week for oil earnings, which reflected the toll of the sharp drop in oil prices. Day traders were credited with some of the gains this week but there was some substantial buying as economic reports have started showing some glimmers of hope.
The big number of the week was today's GDP report, which showed the economy contracted at a 1 percent annual rate in 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.
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 after the announcement, finishing the day at $8. Ford had said earlier in the week that it had seen a "dramatic" boost from the program.
Ford 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 for today — and for the week — following news thatthe bank plans to open a Chinese subsidiary.
Disney was the biggest drag on the Dow, sliding 4.2 percent, after JPMorgan slashed its rating on the stock to "underweight" from "neutral." The entertainment giant late Thursday beat earnings forecastsbut fell short of revenue expectations.
Chevron shares ended up 2.6 percent 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.
In fact, ExxonMobil had the most negative impact on the Dow this week, falling nearly 3 percent.
AIG shares finished the day flat following news that the insurer is still showing signs of weakness, despite getting one of the biggest bailouts in history.
And UBS advanced 6.9 percent 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. Shares rose another 2.2 percent.
Travelers, which was recently added to the Dow, rose 2.7 percent after some encouraging analysts comments that came a day after the insurer raised its full-year forecast.
Volume was moderate today, with about 1.51 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, nearly 2 to 1.
Since their March lows, the Dow is up 40% and the S&P is up 46%. The Nasdaq has soared 57%.
On tap for next week, we've got July auto sales, ISM readings on both the manufacturing and services industries, personal spending, chain-store sales and the big finale: The July jobs report on Friday.
— Jeff Cox and Steve Liesman contributed to this report.
Send comments to cindy.perman@nbcuni.com.
