Stocks finished another volatile session narrowly mixed Friday, as gains in the energy, utilities and materials sectors offset some of Wall Street's angst over the fate of Lehman Brothers Holdings Inc.
The three major indexes all managed to end the week higher.
The troubles of the financial sector dominated trading, as investors tried to glean insights into Lehman's race to sell itself or otherwise regain Wall Street's confidence. The company's shares have spiraled lower this week, heaping pressure on executives at the No. 4 U.S. investment bank to line up a buyer or source of fresh cash.
Lehman shares — which tumbled 42 percent Thursday and are down more than 94 percent for the year — fell another 57 cents, or 13.5 percent, to $3.65 on Friday.
The market is anticipating that Lehman will arrive at a deal over the weekend, said Ryan Larson, senior equity trader at Voyageur Asset Management. Lehman, the government and other banks have been declining to comment officially on the issue, but bankers and industry executives have been saying that Lehman is working feverishly to find a buyer.
Closure on the issue would be better than none, but it won't likely be an antidote for the turbulent market, Larson said.
"Once this deal gets done," Larson said, "you'll see sentiment shift to: Who's next?"
An unexpected slowdown at cash registers last month also weighed on the stock market Friday, particularly on shares of retailers and other consumer discretionary stocks. The Commerce Department said retail sales fell by 0.3 percent in August.
The Dow fell 11.72, or 0.10 percent, to 11,421.99, after falling more than 150 points in the early going.
Broader stock indicators also came well off their lows. The Standard & Poor's 500 index rose 2.65, or 0.21 percent, to 1,251.70, and the Nasdaq composite index rose 3.05, or 0.14 percent, 2,261.27.
The Dow finished the week up 1.79 percent; the S&P finished up 0.76 percent; and the Nasdaq ended up 0.24 percent.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.73 percent from 3.64 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose rose 31 cents to settle at $101.18 a barrel on the New York Mercantile Exchange after briefly crossing below the $100 mark for the first time in five months. Investors tracked Hurricane Ike, which churned across the Gulf of Mexico toward the Texas coast and refining and drilling operations in the region.
Worries about risky debt have been hitting other financial stocks this week. American International Group Inc. fell $5.41 on Friday, or more than 30 percent, to $12.14, making it by far the biggest decliner among the 30 stocks that make up the Dow Jones industrial average.
Merrill Lynch & Co. fell $2.38, or 12.3 percent, to $17.05, while Washington Mutual Inc. slipped 10 cents, or 3.5 percent, to $2.73.
"I think everyone talks about more shoes to drop, and of course there have been a couple of those this week with Fannie and Freddie and Lehman. Hopefully it means we'll be getting closer to the end," said Russell Croft of Croft Value Fund.
Last Sunday, the government took over the mortgage financiers Fannie Mae and Freddie Mac — which on Monday sent the Dow soaring nearly 300 points. Those gains were erased the next day, however, when worries about Lehman resurfaced.
The economic outlook is also keeping the markets volatile.
After the Commerce Department's report on retail sales, investors turned cautious on retailers and other companies that rely on discretionary spending. Sluggishness in buying is an unnerving prospect for Wall Street because consumer spending accounts for more than two-thirds of U.S. economic activity. Macy's Inc. fell $1.04, or 4.8 percent, to $20.81, while Best Buy Co. fell $1.51, or 3.3 percent, to $44.49.
Not all the economic news was unwelcome Friday. Another government report showing a bigger-than-expected drop in wholesale inflation — the steepest decline in nearly two years — at least eased some worries about pricing pressure. And a Reuters/University of Michigan survey on sentiment showed consumers are more upbeat than they were earlier in the summer when energy prices were higher.
Beyond the financial sector, energy and materials names advanced, such as Dow components Exxon Mobil Corp., which rose $1.94, or 2.6 percent, to $77.50, and Alcoa Inc., which rose $1.05, or 3.8 percent, to $28.67.
Ford Motor Co. rose 23 cents, or 4.9 percent, to $4.91, while Dow component General Motors Corp. rose 26 cents, or 2 percent, to $13.01. A Goldman Sachs analyst wrote to in a note to clients that "it is more likely than not" that a loan program for automakers could receive at least partial funding before Congress adjourns this fall.
Declining issues outnumbered advancers by about 9 to 7 on the New York Stock Exchange, where volume came to 1.31 billion shares.
The Russell 2000 index of smaller companies rose 1.26 or 0.18 percent, to 720.26.