updated 7/7/2008 9:15:19 AM ET 2008-07-07T13:15:19

Wall Street capped a shortened trading week with a mixed finish Thursday after some uneven economic data: news of a contraction in the nation’s services sector and a tame reading on employment. But stocks still had their third dismal week in a row, with the major indexes again posting losses as worries about rising oil prices and the fallout from the credit crisis dogged the market.

Major Market Indices

Investors hoping for some guidance from two key economic reports got very little. The Institute for Supply Management said its index of service sector activity fell to 48.2 from 51.7 in May; the reading touched off more misgivings about the well-being of the economy.

The look at the service sector followed a largely as-expected report from the Labor Department, which said the nation’s unemployment rate held steady at 5.5 percent last month. The government also reported that 62,000 jobs were lost in June, but that number was close to economists’ forecasts.

The jobs report did appear to assuage some worries that the snapshot of the labor market would be more grim. Employment numbers are critical because consumers who are out of work or are nervous about losing their job are likely to cut their spending. They’ve already become cautious because of higher food and energy prices.

Christopher Molumphy, chief investment officer at Franklin Templeton fixed income group, said the employment figures don’t point to a labor market in distress. “We are not seeing data that would be consistent with recessionary conditions,” he said.

Molumphy also said the session’s somewhat skewed trading was typical of a shortened session ahead of a holiday. Trading ended three hours early at 1 p.m. Eastern time, and the market was closing Friday for the Fourth of July.

“We try not to overanalyze some of the moves because I think you can easily do that,” he said.

The Dow rose 73.03, or 0.65 percent, to 11,288.54.

Broader stock indicators ended mixed. The Standard & Poor’s 500 index rose 1.38, or 0.11 percent, to 1,262.90, and the Nasdaq composite index fell 6.08, or 0.27 percent, to 2,245.38.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 3.19 billion shares.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.98 percent from 3.96 percent late Wednesday.

The dollar was mixed against other major currencies, while gold prices fell.

Oil prices dominated trading during the week as they have for months. Light, sweet crude settled up $1.72 at a record $145.29 per barrel on the New York Mercantile Exchange after trading as high as $145.85 — also a new record.

Nearly a month ago, on June 6, oil prices logged their biggest-ever one-day advance with a gain of nearly $11 a barrel. The rise that day to more than $138 a barrel and a nearly 400-point drop in the Dow at the time owed in part to comments from a Morgan Stanley analyst that oil would hit $150 a barrel by the Fourth of July.

While oil hasn’t yet touched that level, rising prices have continued to weigh on stocks. Oil’s rise Wednesday after two uneventful days of trading helped send the Dow down by more than 150 points and left the blue chips and the Nasdaq in bear market territory, where they remained by Thursday’s close. The Standard & Poor’s 500 index remains just shy of the 20 percent decline from its high that signals a bear market.

For the week, the Dow lost 0.51 percent, the S&P 500 fell 1.21 percent and the technology-laden Nasdaq declined 3.01 percent. The moves were milder than in the prior week, when stocks showed steep losses largely becuase of concerns about the surge in energy prices.

Dan Laufenberg, Chief Economist at Ameriprise Financial, said the modest growth the economy is managing to show will likely fade by next year.

“Unless you get some kind of relief on energy prices it looks the third quarter is going to be fairly weak as well,” he said.

Thursday’s employment report, while greeted with some relief, also brought some troubling insights. The nation’s job losses in April and May turned out to be steeper than had been thought after revisions. A separate report showed that the number of newly laid off people seeking unemployment benefits jumped last week.

Investors are nervous about the strength of the job market in part because consumer spending accounts for more than two-thirds of U.S. economic activity. Consumers who are out of work or are nervous about losing their job are likely to trim their spending.

Investors will be looking for fresh insights next week with the arrival of corporate quarterly numbers. Aluminum producer Alcoa Inc., a component of the Dow industrials, is expected to unofficially start earnings season with a report due Tuesday. Monthly sales reports are also due from retailers.

The Russell 2000 index of smaller companies fell 6.56, or 0.98 percent, to 665.78.

Overseas, Japan’s Nikkei stock average fell 0.16 percent. Britain’s FTSE 100 rose 0.14 percent, Germany’s DAX index rose 0.77 percent, and France’s CAC-40 rose 1.11 percent.

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