Stocks in an early struggle

NEW YORK (CNNMoney.com) -- Stocks struggled in early trading Friday as investors tried to make sense of three major news stories: a drop in employment, Microsoft's bid for Yahoo and Exxon Mobil's record profit.

The Dow Jones industrial average, after starting lower, was up 0.1%. The Nasdaq composite index added 0.2%. The Standard & Poor's 500 index pushed up 0.2%.

The Labor Department said Friday that U.S. payrolls in January were down 17,000 and unemployment fell to 4.9%. Economists surveyed by Briefing.com expect employers added a modest 70,000 jobs last month, versus the revised 82,000 jobs added in December. The unemployment rate is forecast to remain at 5%.

The payrolls report comes after weekly reading on jobless claims released Thursday jumped unexpectedly, rattling investors already worried about the slowing economy.

Early Friday morning, Microsoft (MSFT, Fortune 500) made a cash and stock offer of $31 a share, representing a 62% premium to where Yahoo (YHOO, Fortune 500)'s shares closed Thursday.

On the earnings front, Exxon Mobil (XOM, Fortune 500), the nation's No. 1 oil company and largest company by market value, reported the biggest quarterly and annual profit in U.S. corporate history.

Google (GOOG, Fortune 500) reported earnings late Thursday that fell a penny a share short of forecasts. Shares of the Internet bellwether lost as much as 9% in after-hours trading.

There was additional bad tech news from Ericsson, the world's largest provider of mobile networks, which reported a sharp drop in fourth-quarter profit Friday as it trimmed its outlook for telecom-equipment demand in 2008 to "flattish" from an earlier guidance of "mid-single-digit growth." It also announced it would cut 1,000 jobs in Sweden. Shares fell 3.7% in early trading in Stockholm.

Motorola (MOT, Fortune 500), the No. 1 U.S. maker of cell phones, said late Thursday it is considering the sale of its cell phone unit. Its shares surged nearly 11% in after-hours trading.

In other corporate news, Alcoa (AA, Fortune 500) and Chinese aluminum firm Chalco partnered up to buy a 12% stake in miner Rio Tinto. The move comes as Rio Tinto is thwarting a takeover approach from larger rival BHP Billiton. A tie-up between Rio (RTP) and BHP (BHP) would be one of the biggest corporate takeovers ever.

Automakers are also set to report January sales Friday. Sales tracker Edmunds.com forecasts a slow start to the year with industry wide U.S. sales off 3%. General Motors (GM, Fortune 500), Ford Motor (F, Fortune 500) and Chrysler LLC are seen continuing to lose market share to import brands.

Oil prices fell on news that OPEC would keep production levels unchanged. A barrel of light sweet crude lost 49 cents to $91.26 a barrel in electronic trading.

In global trade, Asian stocks finished mostly higher, although Japan's Nikkei dipped. European stocks rallied in midday trading.