Stocks ended a volatile trading session mixed on Friday, one day after the market's worst slide in more than two years, as Italy announced a plan to speed up financial reform and American employers added more jobs than forecast in July.
The Dow Jones industrial average closed up 60.93, or 0.54%, at 11,444.61; the S&P 500 fell 0.69, or 0.06%, closing at 1,199.38; and the Nasdaq composite was down 23.98, or 0.94%, to close at 2,532.41. All numbers are preliminary.
U.S. equities surged in the first five minutes of trading Friday after the Labor Department said the U.S. jobless rate fell to 9.1% in July as the nation added 117,000 jobs, then the index erased its gain in less than 20 minutes amid speculation the U.S. would lose its top credit rating. But stocks recovered after Prime Minister Silvio Berlusconi said in a Rome press conference that Italy will speed up its austerity measures and will seek a balanced budget in 2013, a year earlier than planned.
A global slump has erased more than $4.5 trillion from the value of equities worldwide since July 26. The S&P 500 erased its gain for 2011 this week and is now down about 4% for the year.
Stocks slid to their lows of the day amid speculation S&P was close to announcing a reduction in the U.S. AAA credit ranking. S&P spokesman John Piecuch said in an e-mail that the ratings company won't comment on speculation about the U.S. rating. Moody's Investors Service and Fitch Ratings this week affirmed their AAA U.S. ratings.
“There was a lot of psychological damage on the market,” Russ Koesterich, global chief investment strategist for the IShares unit of BlackRock, said in a telephone interview. “Certainly if (a U.S. downgrade) were to happen, this would be one more thing to overcome for the market.”
Two-year Treasury yields increased after reaching a record low Thursday, gaining three basis points to 0.29%.
European equities erased losses after the U.S. jobs data, only to resume declines as concern about the American debt rating spread. The Stoxx Europe 600 Index sank as much as 3.3% before closing down 1.8%. The Stoxx 600 lost 9.9% over the past five days in its worst weekly plunge since November 2008.