Stocks bounce back after big swoon

NEW YORK (CNNMoney.com) -- Stocks were volatile Friday but managed to finish the week higher as Wall Street recovered some ground after last week's big selloff.

The Dow Jones industrial average (up 15.62 to 12,276.32, Charts) and the broader S&P 500 (up 0.96 to 1,402.85, Charts) index both ended the session slightly higher, while the tech-heavy Nasdaq (down 0.18 to 2,387.55, Charts) composite finished little changed.

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Stocks had a mostly upbeat week, bouncing back from last week's swoon, when they turned in their worst weekly performance in four years. For the week, the Dow gained 1.3 percent, the S&P 500 added 1.1 percent and the Nasdaq rose 0.8 percent.

Stocks rose modestly at the open as investors welcomed a mostly positive job report as well as readings on trade and wholesale inventories that all suggested the economy is holding up fairly well.

But the advance lost steam, with investors cautious at the end of a second straight volatile week on Wall Street.

"I think people are tired of the emotional roller coaster of the last two weeks," said Scott Merritt, U.S. equity strategist at JPMorgan Asset Management. "They were looking for an excuse to find a real positive or negative in the jobs report, and I don't think it was there."

Last week's selling came after tumbling Chinese markets and a batch of weak economic reports sparked a mass exodus on Wall Street.

In its monthly employment report, the Labor Department said employers added 97,000 jobs to payrolls in February, versus expectations for 100,000. But both December and January payroll gains were revised higher.

In addition, the unemployment rate, generated by a separate survey, fell to 4.5 percent from 4.6 percent, surprising economists who, on average, thought it would hold steady.

Average hourly earnings, the report's inflation component, rose 0.4 percent last month versus expectations for a rise of 0.3 percent. Earnings rose 0.2 percent in January.

The payroll growth is basically neutral for the markets, Merritt said, while the drop in unemployment and rise in average hourly earnings are "not good news for inflation doves."

Elsewhere on the economic front, the January trade balance narrowed more than expected.

A separate report showed a bigger than expected jump in January wholesale inventories.

The string of economic readings sent Treasury prices tumbling, as bond investors lowered expectations for the Fed to cut interest rates anytime soon.

The decline raised the yield on the 10-year note to 4.58 percent from 4.51 percent late Thursday. Treasury prices and yields move in opposite directions.

Subprime lender New Century Financial (down $0.66 to $3.21, Charts) tumbled 17 percent in active trade on revived worries that it will have to file for bankruptcy. Late Thursday, the company said it had stopped taking new loan applications because some of its financial backers won't provide access to financing.

The drop dragged other subprime mortgage lenders lower, including Fremont General (down $0.31 to $8.03, Charts) and Accredited Home Lenders (down $1.00 to $15.78, Charts).

Homebuilder Hovnanian (down $1.26 to $29.34, Charts) skidded 4 percent after it reported a larger-than-expected first-quarter loss and said it doesn't yet see a bottom for the housing market.

Yahoo! (down $1.59 to $29.12, Charts), down 5 percent, dragged on the Nasdaq composite on news that AT&T wants to scale back its partnership with the search engine, according to a Wall Street Journal article.

Alcoa (up $0.71 to $33.20, Charts) and McDonald's (up $0.51 to $44.15, Charts) were among the stocks that gave the Dow a boost.

McDonald's rose after reporting solid February same-store sales, or sales at stores open a year or more.

National Semiconductor (up $1.14 to $26.42, Charts) jumped after the company said late Thursday that, with inventory worries over, revenue in the current quarter should come in ahead of analysts' expectations. The chip-maker also reported lower fiscal third-quarter earnings that topped analysts' forecasts.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by a margin of 3 to 2 on volume of 1.43 billion shares. On the Nasdaq, advancers topped decliners by a margin of 4 to 3 as 1.95 billion shares changed hands.

In currency trading, the dollar rallied versus the yen and the euro.

U.S. light crude oil for April delivery fell $1.59 to settle at $60.05 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery fell $3.50 to $652 an ounce.

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