Stocks had a fitting end to a choppy July as prices seesawed their way to a narrowly mixed finish. The market still had its best month in a year.
Investors had an ambivalent response Friday to the government's gross domestic product report, which showed that economic growth slowed in the April-June quarter. The Dow Jones industrial average fell almost 120 points in early trading, then ratcheted up and down until the close. The Dow ended down just a point, and the other big indexes had similarly small moves.
The day was much like the rest of July, which saw investors alternately buying on strong earnings reports and selling on weak economic numbers. The Dow rose 7.1 percent for the month. The Dow and the Standard & Poor's 500 index both had their best months since July 2009 and their first winning months since this past April.
A repeat performance in August seemed unlikely due to the market's current pessimism, especially since the bulk of second-quarter earnings reports are in. Many investors, uncertain about the where the market is heading, stayed on the sidelines for much of July or moved money into safer investments. Even on days when the Dow was up 100 or 300 points, trading volume was unusually low.
"It's a very cautious environment today," said Rob Lutts, president, CIO at Cabot Money Management. That caution, he said, is what leads investors to sell.
The Commerce Department's GDP report was troubling for the market, and followed recent reports on housing and unemployment that showed the recovery has slowed. GDP grew at an annual pace of 2.4 percent in the second quarter, less than the 2.5 percent forecast of economists polled by Thomson Reuters.
Analysts said that as investors read deeper into the report, it didn't look as bad as they initially thought. They found some good news in the consumer savings rate.
Business spending on equipment and software also jumped in the second quarter by the biggest amount in 13 years. That was encouraging because it means companies could be getting ready to start hiring.
"We had a little bit for the bulls and a little bit for the bears," Lutts said, "and ultimately no one is really happy."
The Dow fell 1.22, or 0.01 percent, to 10,465.94. Its July gain was its best monthly advance since it rose 7.8 percent in July 2009.
The Dow's top five performers for the month all had strong earnings: DuPont Co., which rose 17.58 percent during July; Caterpillar Inc., up 16.11 percent; American Express Co., up 12.44 percent; Chevron Corp., up 12.30 percent and Microsoft Corp., up 12.17 percent.
The Standard & Poor's 500 index rose 0.07, or 0.01 percent, to 1,101.60. It rose 6.9 percent for July, its best performance since it rose 7.4 percent in July 2009.
The Nasdaq composite index rose 3.01, or 0.1 percent, to 2,254.70.
Rising stocks outpaced losers by about 3 to 2 on the New York Stock Exchange. Consolidated volume, including shares traded on other exchanges, came to a very light 4.2 billion shares, down from Thursday's 4.7 billion.
Volume usually falls off in the summertime but stays strong during July. This July was particularly slow.
"The biggest crowds aren't on the trading floor, they are on the beach. People don't want to be involved in the market now," said Jeffrey Frankel, president of Stuart Frankel & Co. "One day they are up, one day they are down. Nothing is making any sense. That's why there is no volume."
Treasurys benefited from the uncertainty. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.91 percent from 2.99 percent. Its yield is often used as a benchmark for interest rates on mortgages and other consumer loans. A yield below 3 percent suggests investors are worried about long-term growth and don't fear inflation will be a problem anytime soon. Inflation is a threat to the long-term value of bonds.
Investors did get some mildly good news from two other economic reports. The University of Michigan/Reuters consumer sentiment index for July rose slightly more than expected to 67.8 from a preliminary reading of 66.5. Economists expected it to rise to 67.
The Chicago Purchasing Managers Index, which measures manufacturing activity in the Midwest, rose unexpectedly to 62.3 this month from 59.1 in June. Economists were expecting a drop to 56.5. The report is seen as an indicator of how the Institute for Supply Management's nationwide manufacturing index is likely to come in when it's released on Monday.
Traders were also being cautious because they're waiting for a series of key reports next week that will give a first look at how the economy is doing in the current quarter. The ISM will have two reports and the Labor Department issues its report on employment for this month.
Economists predict the ISM will say manufacturing and the services industry expanded in July but at a slower pace than in June. Meanwhile, the unemployment rate likely inched higher to 9.6 percent in July from 9.5 percent in June as the government laid off more temporary census workers. Private employers likely added 90,000 jobs during the month, slightly better than in June.
Overseas markets mostly fell Friday after reports that Spain's credit rating is likely to be cut by Moody's Investors Service. The potential downgrade comes as the country's unemployment rate jumped to a 13-year high of 20.09 percent and the government continues to grapple with rising debt problems.
Spain's IBEX 35 fell 1.2 percent. Britain's FTSE 100 fell 1.1 percent, Germany's DAX index rose 0.2 percent, and France's CAC-40 fell 0.2 percent. Japan's Nikkei stock average fell 1.6 percent.