NEW YORK (CNN/Money) -
Stocks rose Friday after a tough session in which relief over the latest news on the Iraq and terrorism fronts competed with jitters about the U.S. economy following a weak February jobs report.
But the rally was too minor to stop the market from recording its second straight week of losses, and next week's markets looks likely to struggle with the same concerns.
"Unless something dramatic happens over the weekend on the Iraq front, it's going to be more of the same next week," said Michael Carty, principal at New Millennium Advisors. "People are nervous. The trading desks keep getting hit by these rumors and people react to them fast, like the report about Osama bin Laden's sons being arrested this morning."
"The challenge for stocks next week is going to be getting through more Iraq news," Carty added.
Next week will also bring a spate of new economic news, including reports on wholesale prices, retail sales, import and export prices, business inventories and the preliminary March reading of the University of Michigan's consumer sentiment report.
On Friday, the Dow Jones industrial average (up 66.04 to 7740.03, Charts) and the S&P 500 index (up 6.79 to 828.89, Charts) closed a little higher, while the Nasdaq composite (up 2.40 to 1305.29, Charts) closed just above breakeven. All three indexes had swayed on both sides of unchanged throughout the session.
For the week, the Dow lost 1.9 percent, the S&P 500 lost 1.5 percent and the Nasdaq lost 2.4 percent.
Investors managed to push markets a little higher by the close Friday, despite a slew of challenging news on the global front and the state of the U.S. economy.
Employers slashed a shocking number of jobs from their payrolls in February, when economists thought that they would add a few. The news punished stocks at the open, but they quickly recovered after reports -- later dismissed -- surfaced that two of al Qaeda leader Osama bin Laden's sons had been arrested in Afghanistan and that officials might be getting closer to bin Laden himself.
Stocks worked to break higher throughout the late morning as investors sorted through chief U.N. weapons inspector Hans Blix's update on Iraq's disarmament and the subsequent responses from other world leaders.
Blix asked for more time for weapons inspections. France, Russia and Germany -- two of which have veto power on the United Nations Security Council -- would like to see Iraq be given more time before they approve a new resolution authorizing military force.
Despite President Bush's pledge late Thursday that failure to get a U.N. war resolution will not stop the United States from attacking Iraq, Britain Friday offered an amendment to the second proposal that would set a March 17 deadline for Baghdad to get rid of banned weapons completely or face the consequences. The issue is expected to come to a vote as soon as next week. (For details, go to CNN.com).
"I guess a new deadline could be positive for markets, but I'm of the camp that the more the war is postponed, the more it keeps the market distracted," said Tim Heekin, head of stock trading at Thomas Weisel Partners.
Shockingly weak jobs number
Employers cut 308,000 jobs from their payrolls last month, the Labor Department said in a morning report, when economists thought that they would add 8,000. And the unemployment rate rose to 5.8 percent from 5.7 percent the previous month, a smaller-than-forecast rise, but still worrying to investors, particularly as it followed on the heels of a weak weekly jobless claims report Thursday.
Corporate America's woes added to the stress. Tech bellwether Intel (INTC: down $0.66 to $16.04, Research, Estimates) trimmed its current-quarter revenue forecast in an update late Thursday, sparking nervous selling in a number of chip and chip-equipment companies. Intel's ability to sell chips is seen as an indicator of the overall health of the technology sector.
Telecom gear maker 3Com (COMS: down $0.39 to $4.11, Research, Estimates) also lowered its revenue target and saw its shares fall more than 9 percent.
Market breadth was mixed but volume was heavier than it has been in a while. On the New York Stock Exchange, winners beat losers by almost 6 to 5 as 1.36 billion shares changed hands. On the Nasdaq, decliners edged advancers as 1.41 billion shares were traded.
The 10-year Treasury note added 9/32 of a point in price, pushing the yield down to 3.62 percent. The dollar sank against both the yen and the euro.
The price of oil continued to rise, with light crude futures gaining 78 cents to $37.78 a barrel in New York. Gold fell $6 to $350.90 an ounce in New York.
Stocks in Europe fell sharply, as did markets in Asia, where Tokyo's Nikkei 225 index slid to a 20-year low.
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