11 am - Stocks pull back after another decline in jobs

NEW YORK (AP) - Wall Street retreated again Friday after readings on jobsand manufacturing -- the first reports for the third quarter -- indicated thatbusinesses and workers still face a tough economy. The major indexes ended aturbulent week narrowly mixed. A massive quarterly loss at General Motors Corp. and rising oil prices alsogave investors reason to trade cautiously. But the market was considerablycalmer than the first four sessions of the week, when the Dow Jones industrialsrose or fell by triple digits each day in response to economic data or newsabout the financial sector. Friday's reports were not as poor as many analysts had anticipated, whichlikely accounted for the muted reaction. Nonetheless, they portrayed an economythat was still sagging as it entered the second half of the year. The LaborDepartment said jobs fell for the seventh straight month in July by 51,000 --less than expected -- but that the unemployment rate rose to agreater-than-expected 5.7 percent. The report arrived after data Thursday thatshowed an unexpected jump in jobless claims to a five-year high. "It reinforces the idea that we're seeing a steady, but not dramatic,decline in employment, which is likely to last for some time," said MichaelSheldon, chief market strategist at RDM Financial Group in Westport, Conn. Meanwhile, the Institute for Supply Management said manufacturing activitywas flat in July. Given Thursday's disappointing report on gross domesticproduct growth, Wall Street is becoming more certain that the United States isin a recession -- and one that could be prolonged. U.S. recessions since WorldWar I have lasted about 10 months, on average, but have ranged from as little assix months to as long as 16 months, Sheldon said. The flagging economy has sapped consumers' ability to spend freely, which inturn is hurting profits at many big companies. GM said it lost $15.5 billion inthe second quarter, more than analysts predicted and the automaker's third-worstloss in its history. There was also more bad news about construction; the Commerce Departmentreported that building activity declined in June. And the price of oil rose$1.02 to $125.10, retreating from an earlier gain of more than $4, but stillsignaling that its steep decline of recent weeks has at least temporarily beenhalted. The Dow fell 51.70, or 0.45 percent, to 11,326.32. The blue-chip index endedthe week down 0.39 percent. Broader stock indicators also lost ground Friday. The Standard & Poor's 500index fell 7.07, or 0.56 percent, to 1,260.31, and the Nasdaq composite indexfell 14.59, or 0.63 percent, to 2,310.96. Advancing issues, however, narrowly outnumbered decliners Friday on the NewYork Stock Exchange. Consolidated volume came to a relatively light 4.54 billionshares, down from 5.16 billion billion shares Thursday. The S&P finished the week up 0.21 percent, and the Nasdaq finished up 0.02percent. Bond prices edged higher in Friday's trading. The yield on the benchmark10-year Treasury note, which moves opposite its price, fell to 3.94 percent from3.95 percent late Thursday. The dollar was mixed against other major currencies,while gold prices fell. The market's performance the past few sessions shows how jumpy investorsare. The Dow zigzagged up and down by hundreds of points as the marketalternately agonized over the financial sector and signs of economic weakness,and then soared as investors decided things weren't really all that bad afterall. Some analysts believe that a stock market bottom may have been reached, evenif an upswing isn't under way. Others, however, are more cautious and wonderingif more declines are to come -- particularly after Merrill Lynch & Co. announcedbillions of dollars in extra credit-related declines this week. However, most financial stocks performed well Friday, with investors arecautiously optimistic that banks and other financial services companies -- whilestill losing money on their hefty investments in troubled debt -- are startingto clean up their books. Bond insurer Ambac Financial Group Inc. said it agreed to pay $850 millionto settle one of its largest exposures to risky debt instruments calledcollateralized debt obligations. Ambac rose $1.27, or 50 percent, to $3.79,while rival MBIA Inc. rose $1.74, or 29 percent, to $7.67. Other gainers included Dow component American International Group, up 74cents, or 2.8 percent, at $26.79; Wachovia Corp., up $1.71, or 9.9 percent, at$18.98; and Lehman Brothers Holdings Inc., up $1.31, or 7.6 percent, at $18.65. Shares of GM, another Dow component, gave up 84 cents, or 7.6 percent, to$10.23 after posting its quarterly loss. Most companies' quarterly results have been surpassing Wall Street'sforecasts. And beyond financial and consumer discretionary sectors, corporateearnings have been increasing. "There is some room for optimism on the corporate profit front," Sheldonsaid. "But a lot will depend on consumers and energy prices for the remainder ofthe year." Meanwhile, a few pharmaceutical stocks suffered sell-offs on Friday. BiogenIdec Inc. and Elan Corp. PLC fell due to safety concerns related to multiplesclerosis therapy Tysabri. Biogen dropped $19.75, or 28 percent, to $50.01, andElan tumbled $10.12, or 50 percent, to $9.93. The Russell 2000 index of smaller companies rose 1.64, or 0.23 percent, to716.16. Overseas, Japan's Nikkei stock average fell 0.14 percent. Britain's FTSE 100fell 1.06 percent, Germany's DAX index declined 1.28 percent, and France'sCAC-40 fell 1.78 percent. The Dow Jones industrial average ended the week down 44.37, or 0.39 percent,at 11,326.32. The Standard & Poor's 500 index finished up 2.62, or 0.21 percent,at 1,260.31. The Nasdaq composite index ended the week up 0.43, or 0.02 percent,at 2,310.96. The Russell 2000 index finished the week up 5.82, or 0.82 percent, at716.16. The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted indexthat measures 5,000 U.S. based companies -- ended Friday at 12,888.21, up 51.11points, or 0.40 percent, for the week. A year ago, the index was at 14,755.40. Copyright 2008 Associated Press. All rights reserved. This material may not be