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 After slumping early in the session in response to weak consumer confidence and a spike in oil prices, investors seemed to turn their attention to broader signs, including the week's generally satisfactory earnings reports, that suggested that government efforts to steady the economy appear to be working. That shift in focus sent stocks up late in the day.
Although the Reuters/University of Michigan consumer sentiment index came in with its lowest reading since the early 1980s, Tom Lydon, president of Global Trends Investments in Newport Beach, Calif., said companies' first-quarter reports convinced investors that "overall, things aren't all that bad."
"I think a lot of people went into the weekend feeling they didn't want to be on the short side," Lydon said.
The consumer sentiment index fell to 62.6 for April from 69.5 a month earlier, reflecting Americans' concern about rising energy and food prices.
While consumer spending represents about 70 percent of the economy, UBS equities strategist David Bianco said "it's the wrong thing to be looking at to gauge the prospects" for the Standard & Poor's 500 companies.
"Business activity is strong in the U.S. and especially globally," he said. "That's far more important."
The Dow Jones industrial average gained 42.91, or 0.33 percent, to 12,891.86, after falling more than 100 points earlier in the session. The Dow closed the week with a gain of less than 1 percent.
Broader stock indicators were mixed on the day. The S&P 500 index gained 9.02, or 0.65 percent, to 1,397.84, and rose 2.1 percent for the week.
The Nasdaq composite index, depressed by disappointment with a Microsoft Corp. forecast, fell 5.99, or 0.25 percent, to 2,422.93, after dropping as much as 1.6 percent during the session. But advancers were well ahead of decliners in the broader Nasdaq Stock Market, and for the week, the Nasdaq gained 1.4 percent.
Advancing issues outpaced decliners by 2 to 1 on the New York Stock Exchange. Consolidated volume came to 3.72 billion shares, down from 4.34 billion shares on Thursday.
Bond prices fell ahead of the Federal Reserve's meeting on interest rates next Wednesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.87 percent from 3.83 percent late Thursday.
Oil prices, meanwhile, jumped on a series of troubling events overseas, including word that a ship under contract with the U.S. Navy fired flares and warning shots at two small boats of unknown origin in the Persian Gulf. Oil was up earlier following an attack on a pipeline in Nigeria and a looming refinery strike in Scotland; light, sweet crude shot as high as $119.50 a barrel on the New York Mercantile Exchange before falling back to settle at $118.52, up $2.46.
Craig Hester, chief executive at Hester Capital Management in Austin, Texas, said stocks will likely fluctuate as investors digest corporate results from this week and while they await the Fed rate decision.
"The big risks I see for stocks right now are earnings," he said, adding that next week's economic data should also help give investors a better picture, with reports due on the nation's gross domestic product and employment.
Investors could also get further insights into the health of the consumer next week with reports due from names like Tyson Foods Ind., Kellogg Co., Kraft Foods Inc., Burger King Holdings Inc. and Procter & Gamble Co.
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 But so far, "the earnings have come in on the financial side pretty much where people expected and in terms of the industrial side a little bit better than expected," said Charlie Smith, chief investment officer at Fort Pitt Capital Group in Pittsburgh. "Consumers were a little bit weaker than expected. So you net all those together and the earnings season is turning out as people thought it would before it started."
Microsoft fell $1.97, or 6.2 percent, to $29.83, after its first-quarter report. The tech leader said after the closing bell Thursday that worldwide sales next year should offset weakness in the U.S. economy.
Goodyear Tire & Rubber Co. rose $1.66, or 6.1 percent, to $28.91 after posting a first-quarter profit amid increased revenue. The tiremaker, which reported a loss for the same period a year earlier, said it focused on higher-priced tires and international markets.
American Express Co. rose $2.59, or 5.7 percent, to $47.77 after reporting its first-quarter earnings fell 6 percent as more U.S. cardholders failed to make their payments. The credit card lender's total provisions for credit losses jumped 48 percent from a year earlier to $1.27 billion. However, the company said cardholders are continuing to spend and that strength abroad has helped make up for troubles in the U.S.
The Russell 2000 index of smaller companies rose 4.81, or 0.67 percent, to 721.88.
Overseas, Japan's Nikkei stock average closed up 2.28 percent. Britain's FTSE 100 rose 0.67 percent, Germany's DAX index advanced 1.10 percent, and France's CAC-40 rose 0.99 percent.
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The Dow Jones industrial average ended the week up 42.50, or 0.33 percent, at 12,891.86. The Standard & Poor's 500 index finished up 7.51, or 0.54 percent, at 1,397.84. The Nasdaq composite index ended the week up 19.96, or 0.83 percent, at 2,422.93.
The Russell 2000 index finished the week up 0.81, or 0.11 percent, at 721.88.
The Dow Jones Wilshire 5000 Composite Index - a free-float weighted index that measures 5,000 U.S. based companies
- ended Friday at 14,089.21, up 71.91 points, or 0.51 percent, for the week. A year ago, the index was at 15,110.41.
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On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
[Associated Press; By EILEEN AJ CONNELLY]
Copyright 2008 The Associated Press. All rights reserved. This
material may not be published, broadcast, rewritten or
redistributed.
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