US blue chip stocks squeaked out a gain on Friday after a report on the US job market reassured investors about the economy, but growing worries about a segment of the home lending business kept the broader market nearly unchanged.
For the week, stocks rose and recovered some of the ground lost in a steep global equities sell-off that began on February 27 with a drop of almost 9 percent in China's main stock index. At Friday's closing bell, both the blue chip Dow average and the S&P 500 snapped a two-week losing streak. The Dow was up 1.34 percent for the week, while the S&P 500 was up 1.13 percent. The Nasdaq composite index finished the week up 0.83 percent.
Stocks initially soared on Friday after the government reported February job growth was nearly in line with expectations and gave upward revisions of job growth figures from earlier months, easing worries about an economic slowdown. But indexes were knocked lower as investors feared that a fallout from the subprime mortgage market amid a slowdown in the housing sector could hurt consumer spending as banks tighten lending.
New Century Financial Corp, a lender that offers mortgages to people with poor credit histories, said it had stopped accepting new loans and analysts said they expect the company may seek bankruptcy protection soon. "The economy may be a little bit stronger than everybody thinks and consumers may be OK," said Edgar Peters, chief investment officer and director of asset allocation at Boston-based PanAgora Asset Management Inc. But he added that "there's still concern about subprime lenders going under."
The Dow Jones industrial average gained 15.62 points, or 0.13 percent, to end at 12,276.32. The Standard & Poor's 500 Index inched up 0.96 of a point, or 0.07 percent, to finish at 1,402.85. The Nasdaq Composite Index dipped 0.18 of a point, or 0.01 percent, to close at 2,387.55. Stocks have been volatile since a sell-off in global equities last week wiped out about $2 trillion in investor assets, amid a diminishing appetite for risky assets.
New Century shares dropped 17.1 percent, or 66 cents, to $3.21 on the New York Stock Exchange. The stock has fallen nearly 80 percent in the past week. Shares of Clayton Holdings Inc also dropped on worries that a softening in the subprime mortgage market would cut into its profits, analysts said. The stock slid 17.5 percent, or $3.79, to $17.89 on the Nasdaq.
The data showing February nonfarm payrolls added 97,000 jobs was close to economists' forecasts and gave stock investors a reason to feel more optimistic after days of heavy selling in global equities markets. Stocks that advanced included shares of aluminium maker Alcoa Inc after analysts at J.P. Morgan Securities raised their 2007 earnings outlook on the company. The stock rose 2.2 percent, or 71 cents, to $33.20.
The Nasdaq was weighed down by shares of Yahoo Inc after the Wall Street Journal reported AT&T was negotiating changes that could lead to a scaling back of its deal with the Internet company. Yahoo shares were the top negative weight on the Nasdaq 100, tumbling 5.2 percent, or $1.59, to $29.12.
AT&T shares rose 0.1 percent, or 4 cents, to $36.55 on the NYSE. Trading was light on the New York Stock Exchange with about 1.44 billion shares traded, below the 1.84 billion daily average for last year. On Nasdaq, about 1.95 billion shares traded, below the 2.02 billion daily average last year. Advancing shares outpaced declining shares by a ratio of about 3 to 2 on the NYSE. On the Nasdaq, about six shares rose for every five that fell.
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