An early rally faded on the stock market Friday, leaving indexes down about 3 percent for the week as worries resurfaced about a breakup of the euro. BlackBerry maker Research in Motion plunged after slashing its forecast for holiday sales.
The Dow Jones industrial average closed down 2.42 points Friday, less than 0.1 percent, at 11,866.93. It had been up as many as 99 points after the Italian government won a confidence vote on austerity measures. It turned mixed around midday as Fitch warned that it might downgrade the debt of Italy, Spain and four other countries that use the euro.
Materials and industrial companies rose, signaling that traders expect the economic recovery to remain on track. Utilities, health care and consumer staples companies lagged the market as traders sold stocks that are considered to be safer when the economy is weak.
The Dow Jones industrial average broke a three-day slump Thursday on news that claims for unemployment benefits plunged last week and measures of manufacturing in the Northeast improved dramatically. The Dow lost 360 points over the first three days of the week as investors questioned whether Europe's agreement to closer coordinate fiscal policy would be enough to save the euro from a catastrophic breakup.
Some analysts believe nervousness about Europe this fall and winter pushed stock prices lower than their fair value. Investment adviser Uri Landesman, president of Platinum Partners, expects stocks to rise into next year because of the growing likelihood that economic news and European headlines will remain positive.
"The odds are, the news is going to be better than the market is discounting," Landesman said. He said the market is near the low end of its recent trading range, and a dose of positive news could set off a mini-rally. Any market moves next week could be sharp as trading volume thins out before the Christmas holiday, Landesman said.
The Standard & Poor's 500 index rose 3.89, or 0.3 percent, to 1,219.65. The Nasdaq composite index rose 14.32, or 0.6 percent, to 2,555..33 The Dow is down 2.6 percent for the week; the S&P 2.8 percent. The Nasdaq lost 3.5 percent.
The yield on the 10-year Treasury note plunged to 1.85 percent from 1.93 percent earlier Friday after the government said consumer prices were unchanged last month, suggesting that inflation remains low. Low inflation makes bonds more attractive because it doesn't diminish the buying power of the fixed return a bond provides over time.
The gains were broad. Eight of the 10 industry groups in the S&P 500 index rose, led by materials and industrial companies. U.S. factories in some regions have seen shipments and orders rise this month, according to two surveys released Wednesday. Materials companies are benefiting from soaring commodity prices.
Research In Motion Ltd. plummeted 11 percent after the company said late Thursday that new phones seen as critical to its future will be delayed until late next year. RIM also is taking a big loss on unsold tablet computers and predicted that its BlackBerry sales will fall sharply during the holiday sales season.
Online game developer Zynga Inc. fell 5 percent in its first day of trading on the Nasdaq. The maker of Farmville's initial public offering was priced late Thursday at $10 per share, raising $1 billion. That means the San Francisco company can boast the biggest Internet IPO since Google Inc. first offered shares in 2004.
Among the other companies making big moves:
— Adobe Systems Inc. jumped 6.6 percent after the software maker reported earnings and revenues that were far better than what analysts had expected. Analyst Walter Pritchard at Citigroup said the quarter was a "blow-out when most expected weakness."
AP Business Writer Joshua Freed contributed to this story.
Follow Daniel Wagner at www.twitter.com/wagnerreports.