Wall Street gives up gains

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On this frantic Friday, what do you think is the biggest news on Wall Street?

• Microsoft announces $45 billion bid for Yahoo
• Exxon earns biggest quarterly profit ever
• Government reports a job loss in January

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NEW YORK (CNNMoney.com) -- Stocks turned lower Friday morning, giving up early gains as concerns about the economy dampened enthusiasm over Microsoft's bid for Yahoo.

Nearly two hours into the session, the Dow Jones industrial average (INDU) lost a few points, with Microsoft its biggest laggard. The broader Standard & Poor's 500 (SPX) index was little changed. The Nasdaq composite (COMP) lost 0.6%.

All three major gauged had posted gains of about 1% in the early going.

Microsoft made an unsolicited $44.6 billion cash and stock bid for Yahoo Friday. The offer of $31 a share represents a 62% premium over Yahoo's closing price Thursday.

Yahoo (YHOO, Fortune 500) shares shot up 47%, while Microsoft (MSFT, Fortune 500) shares fell 5.8%.

Investors cheered the deal news early on, but a weak January jobs reignited recession fears.

Employers cut jobs from their payrolls in January, the government reported Friday morning, surprising economists who were expecting a gain of 70,000 jobs. It was the first drop in employment in four years. On the upside, the previous month's anemic rise in employment was revised higher. (Full story).

Other economic readings came in mixed. Construction spending dropped 1.1%. The January consumer sentiment index from the University of Michigan was revised down to 78.4 from an initial 79, and the ISM manufacturing index climbed more than expected, rising to 50.7 in the month from 47.7 in the previous month.

On the earnings front, Exxon Mobil (XOM, Fortune 500) reported the highest quarterly and annual profit ever, helped by surging oil prices. (Full story).

Late Thursday, Google (GOOG, Fortune 500) reported higher quarterly sales and earnings that were short of analysts forecasts, sending shares lower Friday.

Wall Street rallied Thursday, ending a miserable January on a high note, after comments from bond insurer MBIA (MBI) helped temper worries that a meltdown in that sector was the next leg of the credit market fallout.

Other markets. Treasury prices rose, lowering the yield on the 10-year note to 3.57% from 3.59% late Thursday. Bond prices and yields move in opposite directions.

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

U.S. light crude oil for March delivery fell $1.17 to $90.58 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery fell $9 to $919 an ounce.