Stocks pared losses as the Dow and S&P 500 rose amid thin New Year's Eve trading, as the markets struggled to end the year on an upbeat note.
The Dow Jones Industrial Average rose slightly, following a weak sessionon Thursday.
Alcoa , Verizon and American Express rose, while Hewlett Packard and Chevron fell.
The S&P 500 advanced slightly, while the Nasdaq fell. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose to nearly 18.
Among key S&P 500 sectors, telecom, utilities and financials rose, while technology fell.
Investors looked to lock in the year's strong gains in the final trading day of 2010, but even a significantly weaker U.S. dollar wasn't helping the outlook for the session.
The dollar fell more than 0.5 percent against a basket of foreign currenciesand was especially weak against the euro, which hit its highest level against the U.S. currency in more than a month. December marked a possible unwinding of the weak dollar-weak stocks trade, as both rose almost in tandem through the month.
The markets remain on track to post solid results for the month and the year. As of the close Thursday, the Dow was up 5.12 percent for December and nearly 11 percent for the year-to-date. The S&P 500 was up 6.5 percent for the month, and 12.8 percent for the year-to-date. The Nasdaq rose 6.6 percent for December, and 17.4 percent for the year-to-date.
U.S. stock markets will be open for a full trading day, but the bond market will close at 2 p.m. The New York Stock Exchange said that a full session is requiredbecause it's the end of a monthly and yearly accounting period.
The weak dollar has been a key to surging commodity prices this year. The Reuters-Jefferies CRB Index was on pace to gain 15 percent in 2010, led by a 95 percent rise in palladium prices.
The price of oil rose slightly to trade just above $90 a barrel. Oil is on pace to end the year up more than 12 percent with an average price of nearly $80 a barrel, thanks also to cold weather, rising global demand, and falling inventories.
Meanwhile, gold rose more than 1 percent Fridayto trade above $1,418 an ounce, and was on pace to post a gain of more than 29 percent for the year. The precious metal's annual performance was its best since 2997.
Borders sank after a report in the Wall Street Journal that the bookstore chain was delaying payments to publishers.
CVS Caremark was down slightly after news the drugstore chain agreed to buy Universal American's Medicare prescription drug business for about $1.25 billion. Shares of Universal American soared.
And IMAX shares surged on a report in the U.K.'s Daily Mail that Sony may bid for the big-screen movie company.
ArcelorMittal , meanwhile, rose after news the steel producer boosted its offer to control Baffinland Iron Mines . Rival Nunavut Iron has also bid for the Canadian company, which has a huge deposit of iron ore in the Canadian Arctic.
No economic news expected to be released this session.
European shares fell in light volumes with many of the region's indexes closed and the rest trading for a half day. Many Asian stock markets also closed early and the overall picture was amixed one at the close. Australian stocks saw the sharpest declines
On the Calendar Next Week:
MONDAY: ISM manufacturing index, construction spending; new Congress sworn in.
TUESDAY: Auto sales released, factory orders, FOMC minutes, API weekly report; earnings from Mosaic.
WEDNESDAY: MBA mortgage applications, Challenger job-cut report, ADP employment report, ISM non-manufacturing index, oil inventories; earnings from Family Dollar. Kansas City Federal Reserve President Hoenig speaks.
THURSDAY: Chain store sales, Monster employment index, ECB announcement, jobless claims, natural gas inventories, Treasury STRIPS, money supply; earnings from Monsanto.
FRIDAY: Nonfarm payrolls report, consumer credit; Federal Reserve Chairman Bernanke speaks, Federal Reserve Vice Chairman Janet Yellen speaks.
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