Stocks struggle at end of down week

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NEW YORK (CNNMoney.com) -- The Nasdaq surged Friday and the broader market struggled at the end of the first down week in a month for Wall Street.

The Dow Jones industrial average (INDU) lost 16 points, or 0.2%. The S&P 500 (SPX) index added 3 points or 0.3%. The Nasdaq composite (COMP) rose 20 points or 1.1%.

Blue chips posted slim gains Thursday after better-than-expected reports on the labor market and manufacturing helped counter a recent batch of mixed economic news. The revived optimism remained in play Friday.

But Friday was also under the influence of the quadruple options expiration, or "quadruple witching," a quarterly event in which stock index futures and options and individual stock futures and options all expire at the same time. It creates volatility in the underlying stocks, particularly toward the end of the session.

"We need to get past the quadruple witch and then next week we'll see where we are," said Rick Bensignor, chief market strategist at Execution LLC.

"I think the highs we saw a week ago were probably the highs we'll hold on to for the near term," he said.

Since bottoming March 9 at a 12-year low, the S&P 500 had run up 40% through last week. But stocks closed lower this week on worries that the rally may have outpaced any signs of recovery.

Bensignor said that the market is at a critical point technically and is vulnerable to a bigger pull back in the short term.

Next week brings reports on housing, durable goods orders and the labor market. The Federal Reserve holds a two-day meeting to discuss monetary policy.

Jobs: The jobless rate rose in nearly every state in the nation in May, the government reported. One state -- Nebraska -- registered a decline and Vermont saw no change.

Michigan led the nation with a 14.1% jobless rate, followed by Oregon with a 12.4% rate. For the full year, jobless rates were higher in all 50 states and the District of Columbia.

However, the labor market typically lags any other broader recovery in the latter stages of a recession, so the day's jobless numbers didn't seem to impact investors looking for signs of a broader stabilization.

A number of recent indicators have suggested the job market is starting to stabilize, but that hasn't helped the millions of unemployed Americans looking for work.

iPhone: Apple (AAPL, Fortune 500)'s iPhone 3G S went on sale Friday, and was expected to sell as many as 500,000 copies this weekend, according to a Piper Jaffray analyst. The third generation of the iPhone features a better camera that includes video capturing and editing capabilities, a longer-lasting battery, voice-command control and a built-in digital compass.

The 16-gigabyte version costs $199 with a new contract with AT&T (T, Fortune 500) and the 32-gigabyte version costs $299 with a new activation. Apple will also still sell an 8-gigabyte version for $99.

Apple shares gained 2.7% Friday.

On the move: Falling commodity prices dragged on the underlying stocks, keeping the blue chips in negative territory.

Dow oil components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) slipped. Other Dow losers included Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Coca-Cola (KO, Fortune 500), Procter & Gamble (PG, Fortune 500) and Wal-Mart Stores (WMT, Fortune 500).

Components Hewlett-Packard (HPQ, Fortune 500) and Microsoft (MSFT, Fortune 500) gained, offsetting the losses.

Microsoft was higher after Goldman Sachs added the software leader to its "conviction buy" list, according to reports.

JPMorgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and American Express (AXP, Fortune 500) all gained, along with the broader financial sector. The KBW Bank (BKX) sector index rose 2%.

Late Thursday, Research in Motion (RIMM) reported higher quarterly earnings that topped estimates and higher revenue that missed estimates. The BlackBerry maker also forecast current-quarter earnings that are above forecasts and sales at the low end of forecasts. Shares fell almost 5% Friday.

Market breadth was positive and volume was heavy because of the quadruple options expiration. On the New York Stock Exchange, winners topped losers three to two on volume of 2.13 billion shares. On the Nasdaq, advancers beat decliners three to two on volume of 3.01 billion shares.

Bonds: Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.82% from 3.83% Thursday. Treasury prices and yields move in opposite directions.

Other markets: U.S. light crude oil for July delivery fell $1.82 to settle at $69.55 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery rose $1.60 to settle at $936.20 an ounce.

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

In global trading, Asian markets ended mixed and European markets ended higher.