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Stocks ended higher Friday, finding momentum at the end of a very choppy session in which concerns about global growth vied with investor willingness to scoop up shares beaten down in the recent sell-off.
But selling earlier in the week left the major gauges lower for the week, with the Dow and S&P 500 both down around 4% and the Nasdaq off around 5%.
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The Dow Jones industrial average (INDU) rose 125 points or 1.3%, after having fallen as much as 150 points earlier in the session.
The S&P 500 index (SPX) gained 16 points or 1.5% and the Nasdaq (COMP) composite gained 25 points or 1.1% after having been on both sides of breakeven throughout the session.
The CBOE Volatility index, the VIX (VIX), Wall Street's fear gauge, fell 12% to 39.88 as investor anxiety lessened. However, the VIX had fallen more substantially in the early afternoon. On Thursday, the VIX spiked to a 14-month high of 45.48.
Stocks were volatile through the session as worries about the European economy and the weak euro were countered by some buying interest now that the market is more than 10% off 2010 highs. A decline of more than 10% on a closing basis is technically considered to be a correction.
Since peaking at roughly 18-month highs in late April, the Dow had lost 10.2% and the S&P 500 had lost 12%. The Nasdaq was at a 22-month high at its peak and is down 12.9% as of Thursday's close.
Thursday's session intensified the recent wave of selling, with the three major gauges losing between 3.6% and 4.1%, making for the worst day on Wall Street since February 2009 at the height of the financial crisis. The sell-off also pushed the S&P 500 below the 200-day moving average, a key technical level traders watch.
Stocks fell again in the morning Friday, dropping below the lows from the early-May "flash crash" -- in which erroneous computer trading sent the Dow down by almost 1,000 points, before it recovered near the close.
Hitting those lows again Friday seemed to bring in some new buyers, with market pros using those earlier lows as a good point to tiptoe back into the market. But the advance Friday was never especially robust, with stocks seesawing through the session.
"We went to the flash crash intraday lows and bounced back, which is good, but I think the mindset has changed and people are going to be selling into rallies," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams.
He said that the S&P 500 needs to close above the 200-day moving average within the next few sessions -- otherwise that level, around 1102, or 3% above Thursday's close, is going to become hard for the market to surpass.
What's moving: Big bank stocks sustained gains through the afternoon, with Dow components JPMorgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and American Express (AXP, Fortune 500) all rising.
A broad financial sector rally propelled the KBW Bank (BKX) sector index by 4%. Passage of the long-in-the-works Wall Street reform bill may have sparked the buying, as it removed an uncertainty hanging over the sector.
But gains on the day were broad based, with 28 of 30 Dow components ending higher. In addition to the financial shares, gainers included Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), IBM (IBM, Fortune 500), 3M (MMM, Fortune 500) and Exxon Mobil (XOM, Fortune 500).
In company news, Google (GOOG, Fortune 500) got the regulatory OK for its $750 million purchase of mobile advertising firm AdMob, following a six-month antitrust investigation. The Federal Trade Commission approved the deal since rival Apple (AAPL, Fortune 500) recently purchased a mobile advertising service, Quattro Wireless.
Market breadth was positive. On the New York Stock Exchange, winners beat losers three to one on volume of 2.3 billion shares. On the Nasdaq, advancers topped decliners by two to one on volume of 3.36 billion shares.
What's in the Wall Street bill?
Wall Street reform: On Thursday night, the Senate passed a far-reaching Wall Street reform bill that is part of legislation that aims to prevent another financial crisis.
The nearly 1,600-page bill establishes a new consumer regulatory agency, sheds light on complex financial products and provides a new way for the government to deal with so-called too big to fail financial firms.
The bill has to be reconciled with a similar measure the House of Representatives passed in December before it can be sent to President Obama to sign.
Company news: Dell (DELL, Fortune 500) reported higher quarterly earnings and revenue that topped expectations, after the close of trading Thursday. Strong business spending fueled the sales gain. However, the company's gross margins, a key measure of profitability, were lower than what many analysts were expecting. Dell shares fell 6.8% Friday.
Job market: More than half of all states saw lower unemployment rates last month, according to state-by-state figures released Friday morning.
Euro/dollar: The euro gained 0.7% versus the dollar, rising for the third day in a row, although investors don't seem to be taking any comfort from the modest recovery in the European currency. The euro has seesawed over the last few days after plunging to a four-year low of $1.2234 on Monday.
The dollar rose 0.4% versus the yen.
World markets: Markets in Europe cut bigger losses to close with modest declines. The British FTSE 100 fell 0.2%, the German DAX lost 0.7% and the French CAC 40 ended barely lower.
Asian markets were mixed. The Japanese Nikkei fell 2.5%, but China's Shanghai Composite turned higher, gaining 1%. Hong Kong markets were closed.
Commodities: U.S. light crude oil for July delivery fell 76 cents to settle at $70.04 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery fell $12.50 to settle at $1,176.10 an ounce.
Bonds: Treasury prices rose, lowering the yield on the 10-year note to 3.20% from 3.26% late Thursday. Treasury prices and yields move in opposite directions.
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Retail sales posted the eighth straight monthly gain in April, but increases were weak after March's data posted the biggest jump on record.
Sales tracker Thomson Reuters, which looks at monthly same-store sales for 28 chains, said Thursday that April sales increased 0.5% over last year. Thomson had expected a 1.7% increase.
Of the 28 retailers, 69% missed Thomson's expectations; 27% beat; and 4% matched.
Same-store sales, or sales at stores open at least a year, are a key indicator of retailers' performance. The data are also important to the overall recovery, since consumer spending fuels two-thirds of the economy.
The weakness in April data was in sharp contrast to the previous month. March's report showed sales increased 9.1% over last year, the biggest monthly gain since Thomson began keeping records in 2000.
0:00 /2:26Time-lapse: A day at a Walmart store
The March data got a boost from unusually warm weather, Easter shopping and improved consumer confidence, Thomson said in its report. The calendar shifted the Easter holiday to March this year.
"For year-over-year comp[arisons], it's essential to average the results of [March and April] to get a smoother representation of how the Easter months fared," the Thomson report said, noting the two-month average is a "robust" 4.8% gain.
Teen apparel stores posted the biggest misses in April. That included alternative clothing store Hot Topic (HOTT), which reported sales were down 12.5%, while Thomson expected only a 7.9% drop. The Buckle (BKE) posted a 5.7% decline, while expectations were for a 1.7% jump.
Membership warehouse club Costco (COST, Fortune 500) was among the bright spots, with an 11% gain, but it missed estimates for an increase of 11.2%.
The number of Americans filing initial claims for unemployment insurance fell for the third straight week, according to weekly government data released Thursday.
There were 444,000 initial jobless claims filed in the week ended May 1, down 7,000 from a revised 451,000 the previous week, according to the Labor Department's weekly report.
Economists surveyed by Briefing.com had expected new claims to fall to 440,000 in the latest week. The number of new claims was the lowest since the 442,000 reported in the week ended March 27.
The Labor Department also tracks the four-week moving average of initial claims, which smoothes out volatility in the measure. That number was 458,500 for the week, down 4,750 from the previous week's revised average of 463,250.
"Things are lining up for recovery, but it's slower in its evolution than we expected," said Carl Riccadonna, U.S. economist for Deutsche Bank in New York.
A lack of economic confidence could be keeping hiring managers on the sidelines, according to Riccadonna. Jobless claims at or below 400,000 could help to boost morale.
"It's not helped when you look on TV and see developments in Europe and people worried about the impact of trans-Atlantic contagion," he said.
The number of people filing continuing claims totaled 4,594,000 in the week ended April 24, the most recent data available. That figure was down 59,000 from the preceding week's revised 4,653,000 claims, and slightly below the 4,600,000 economists expected, according to Briefing.com. Continuing claims were down for the fifth straight week.
The four-week moving average for continuing claims totaled 4,649,000, up 8,000 from the preceding week's revised average of 4,641,000.
Continuing claims data exclude people whose benefits expired or those who have moved to state or federal extensions. It reflects those filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks.
In April, lawmakers in the House and Senate approved an extension of unemployment insurance until June 2. The move followed a number of tax breaks andother measures designed to spur job growth and help push the current 9.7% unemployment rate lower.
0:00 /4:50Don't ask for a state job
Although many economists say the measures are slowly working, states are still feeling the pinch and jobless claims would have to fall further, faster, before the national unemployment rate ticks lower.
There has been increasing debate over whether the decline in continuing claims is due to real job creation or people exhausting their benefits. Riccadonna says there's no easy way to tell, but that "if the pace of job creation continues to accelerate, we can be increasingly confident that the drop in continuing claims is people finding jobs and not just rolling off the books."
Jobless claims fell the most in Florida, with a dip of 2,766 in the week ended April 24, primarily due to fewer layoffs in the construction, service, and manufacturing industries.
North Carolina and New York also saw dips in the 2,600 range. California, Massachusetts and Oregon topped the list of states with the largest increases in initial claims.
Job reports paint a brighter picture
The report follows a spate of upbeat economic data in recent weeks. But that has been overshadowed by fears that Greece's debt crisis could spread throughout Europe.
Riccadonna said that he is not overly concerned about the impact on the United States in the short term, beyond some "exchange rate effect." However, a significant decline in the euro to $1.15 could hurt the competitiveness of U.S. exports, which he says has been a key driver in the recovery so far.
Three separate reports on Wednesday pointed to strong signs of jobs growth when the Bureau of Labor Statistics releases its official read of the unemployment situation on Friday. Economists surveyed by Briefing.com forecast that the U.S. added 187,000 jobs in April, compared to a gain of 162,000 in the prior month.
Still, total hiring would need to be 200,000 or more a month to push the rate down significantly, he said. Given recent economic data, he thinks the "big one" could come as early as May.
Although the nation is expected to have added jobs last month, many economists forecast the unemployment rate, also due Friday, to remain unchanged at 9.7%. Riccadonna is a bit more optimistic, forecasting a slight tick down to 9.6%.
"Really substantial gains in excess of 300,000 should be sufficiently jarring enough to wake up hiring managers and also the financial markets," said Riccadonna. "We're turning the corner. The question is how fast?"
House lawmakers on Thursday approved a $6 billion measure that aims to provide rebates to homeowners who invest in energy efficiency improvements -- but not without a fight from Republicans.
The bill, officially known as the Home Star Energy Retrofit Act but better known as "cash for caulkers," has been touted by President Obama since December as one of the signature pieces of his administration's larger job-creation strategy.
The act "is a common-sense bill that will create jobs, save consumers money, and strengthen our economy," President Obama said after the House passed the measure. "We have workers eager to do new installations and renovations, and factories ready to produce new energy-efficient building supplies."
House Speaker Nancy Pelosi, D-Calif., estimates that the legislation will create nearly 168,000 jobs in construction, manufacturing, and retail.
The House vote of 246-161 went through with support from the Democrats and overwhelming rejection from the Republicans. The vote simply authorizes the creation of the program; it does not appropriate the funds needed to run it.
The Senate is expected to take up the legislation this summer and determine how to pay for the program, which is likely to be controversial.
How will homeowners cash in?
The bill would fund rebates of as much as 50%, up to $3,000, for energy-saving efforts such as insulation improvements and the replacement of windows, doors, heating and cooling systems. The installations will have to be completed by qualified contractors.
Homeowners that choose to make improvements on their own will receive rebates of up to 50%, to a maximum of $250, on air sealing and insulation products.
The bill also includes reimbursements for those who conduct comprehensive energy audits and reduce their home's total consumption. Homeowners who trim their energy usage by at least 20% can receive up to $8,000 in rebates.
Pelosi said that the bill will cut energy bills by up to $500 a year for some 3 million families.
The bill will also distribute $600 million to states for grants to help mobile homeowners replace pre-1976 models with energy-efficient ones.
Political wrangling
Through a motion to recommit, a political maneuver used by lawmakers to send a bill back to the committee that drafted it, House Republicans added their own conditions to the legislation.
They incorporated language that forbids the program's financing from expanding the federal deficit and bars the bill's funds from being allocated to contractors who have sex offenders as employees.
The Republican stipulations also disqualify from the program homeowners with an annual income of more than $250,000 from the program and require that the rebates be sent directly to homeowners instead of being provided through stores, contractors or other parties.
House Energy and Commerce committee Chairman Henry Waxman, D-Calif., accepted the changes so that the bill can move forward for a vote in the Senate.
Pelosi called the Republican changes a "poison pill" and said House members would "work with the Senate to fix this flawed language."
