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Stocks end big week with a whimper

Dow and Nasdaq stock indexes edge down Friday after gaining more than 2 percent for the week. S&P sees small rise, despite an unexpected decline in consumer sentiment.

Richard Drew/AP
Specialist Michael Scavone works at his post on the floor of the New York Stock Exchange Thursday. Two of the three major stock indexes fell slightly Friday after gaining more than 2 percent for the week.

It was a mundane end to an electrifying week on the stock market.

Stock indexes wavered indecisively between small gains and losses Friday before closing mixed. Earlier in the week, the Standard & Poor's 500 and the Nasdaq composite index were on a tear, hitting levels that hadn't been reached in years.

On Friday, the Dow Jones industrial average and the Nasdaq both ended the day down. The Dow fell 20.14 points to 13,232.62. The Nasdaq fell 1.11 points to 3,055.26. The broader S&P 500 index edged up 1.57 points to 1,404.17.

Despite Friday's losses, the three major indexes were all still up more than 2 percent for the week. The Dow had its first down day after seven straight gains, ending its longest winning streak since February 2011.

Investors were weighing competing reports about the health of the U.S. economy. A key measure of consumer sentiment came in lower than expected, and high gas prices continued to weigh down hopes about a recovery. On the plus side, prices for other goods, including food, stabilized.

Telly Zachariades, a partner at The Valence Group investment bank, said the market appears to be on the upswing, even if it's marred by a few off-days. "It's almost like today was a spring training game that ended up getting rained out," he said.

Others think the market's rise earlier this week only masks underlying problems in the economy's fundamentals, like uncertainty over oil prices and tax policies and the country's burgeoning deficit.

"The market is giving us a free pass on our unsustainable fiscal positions through the presidential election," said Barry Knapp, head of equity strategies at Barclays Capital. "But in 2013, we're going to have to deal with this."

"What we've seen today," Knapp added, "is a little bit of a warning sign."

The market's back-and-forth pattern this week was caused partly by conflicting news about the economy. The University of Michigan's closely watched consumer sentiment index came in below analysts' expectations, driven by worries about rising gas prices. The Labor Department also noted that gas prices soared 6 percent in February.

Many analysts think the higher gas prices will crimp the U.S. economy by shrinking the amount of money that people have to spend on discretionary purchases. Gas is currently selling for an average of $3.83 per gallon ($1 a liter) in the U.S., 31 cents more than a month ago.

The price of gas has spiked as Iran's nuclear program sows tension in the Middle East. Some analysts also blame the Federal Reserve, which has pumped cheap money into the economy in an attempt to help it recover. That has also put pressure on the U.S. dollar. When the dollar falls in value, it takes more of them to buy the same amount of oil.

The Labor Department also noted that inflation in other sectors seemed under control. Food prices, which have been rising, were unchanged for the first time in 19 months.

Positive signs from bonds and the European markets added to the confusion about where the market was going. The yield on the 10-year Treasury continued to rise, reaching 2.30 percent late Friday compared with 2.03 percent the week before. That's the highest level since October and a sign that investors are more confident in the economy. Markets in Europe also finished higher.

The earlier part of the week was an exhilarating ride for the stock market. Both the Nasdaq and the S&P 500 crossed key milestones. The Nasdaq closed above 3,000 for the first time since December 2000; The S&P closed above 1,400 for the first time since June 2008. On Tuesday, the Dow, the Nasdaq and the S&P 500 all recorded their biggest percentage gains of the year.

The euphoria was brought on by what investors saw as encouraging news about employment and retail sales. Some cautioned that the improvements were incremental and unconvincing, driving short-term market surges but little else.

"It's becoming so much of a sound bite economy," said Ziad Abdelnour, CEO of private equity firm Blackhawk Partners.

In the U.S., Bank of America led the Dow higher, rising more than 6 percent after a report that its proportion of delinquent loans fell in February. Buffalo Wild Wings fell more than 3 percent after a Wedbush analyst lowered his rating to the equivalent of hold from buy, noting the high cost of wings.

Energy companies were the biggest gainers in the S&P 500 index. Transocean, an offshore drilling company, rose nearly 5 percent after it reported that it had secured several new contracts. Analysts from at least three companies raised their price targets on the company.

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