Stocks Trim Losses on Bargain-Hunting

Stocks managed to contain their losses Friday as investors entered the market for bargains after a steep morning sell-off spurred by a deadly car bomb blast outside the U.S. consulate in Karachi, Pakistan, and a drop in a key consumer sentiment gauge.

The Dow Jones industrial average ended down 28.59 points, or 0.3 percent, at 9,474.21, and the broader Standard & Poor's 500 Index fell 2.29 points, or 0.23 percent, to 1,007.27, according to the latest data. The technology-laced Nasdaq Composite Index , however, rose 7.88 points, or 0.53 percent, to 1,504.74.

For the week, the Dow fell 1.2 percent. The S&P 500 and the Nasdaq composite each dropped 2 percent.

News of the bombing and the gloomy economic data spurred an early morning selloff that drove the broader market and the Nasdaq market to lows unseen since September. The Dow fell more more than 210 points, setting trading curbs in index-arbitrage trades. But technology stocks cautiously made their way into positive territory, bolstered by a snapback in the biotechnology sector.

Still, investors remained wary of buying aggressively amid a slew of concerns plaguing Wall Street including geopolitical turmoil, questions over Corporate America's accounting and tepid earnings.

"Investors are increasingly skittish. They feel as though their trust has been broken, and they're going to have to rebuild their confidence," said John Forelli, portfolio manager at Independence Investment LLC. "People are really skeptical of the strength in the recovery right now."

A report showing that consumer sentiment fell sharply in early June renewed concerns about a pullback in consumer spending -- which powers two-thirds of the economy -- and helped fan worries the economy may not be able to recover as quickly as hoped.

Adding to those jitters was more pain in the wireless telecommunications sector, which was battered yet again by worries about growth.

"Nobody's really willing to commit," said Keith Janecek, vice president of institutional sales and trading at Legg Mason Wood Walker Inc. "Everybody would rather be on the sidelines until it's all worked out."

A car bomb outside the U.S. consulate in Karachi on Friday killed at least 11 Pakistanis only a day after U.S. Defense Secretary Donald Rumsfeld left the country, police said. They said the blast looked like a suicide bombing.

A spokesman for the U.S. embassy in Islamabad said no foreigners or staff at the consulate were killed in the explosion, although one American and five Pakistani employees received minor injuries when struck by flying debris.

But the market ended well off its worst levels of the day, trimming is losses after the Dow fell more than 2 percent in early trade. This week marks the fourth straight week of losses for all three key U.S. market gauges, and investors were attracted later by beaten-down share prices.

"It's a market that to a certain extent is exhausted from going down," said Jon Baranko, director of trading at Strong Capital Management, which oversees $50 billion. "The sellers are starting to worry that they're making sales into an oversold market."

Shares of biotechnology companies, which have been battered in recent weeks, were up on Friday, driving the Nasdaq biotechnology index up 4.7 percent.

Shares of Biogen Inc. (BGEN), which warned last week of an earnings shortfall due to slower-than-expected drug sales, rose 7.5 percent, or $2.98, to $42.42 after the company said U.S. regulators want more information, but not new trials, before approving its experimental psoriasis drug Amevive.

Shares of wireless companies, however, remained weak after brokerage downgrades of the sector and after phone company Sprint said late on Thursday subscriber growth in its wireless unit would lag previous forecasts by 10 percent to 15 percent for the year and that it was cutting capital expenditures.

Shares of Sprint PCS (PCS) fell $1.59, or about 26 percent, to $4.40, hit further after J.P. Morgan cut its rating on Sprint PCS, among others. Sprint (FON) shares fell $2.54, or 18 percent, to $11.75.

Brokerage Merrill Lynch also said it had downgraded its recommendation on several U.S. wireless companies, including Triton PCS Holdings Inc. (TPC) , Sprint PCS and AT&T Wireless (AWE), to medium-term "reduce/sell" and long-term "neutral."

ATT Wireless fell 60 cents, or 9 percent, to $5.75. And on the Dow, telecoms giant AT&T Corp. (T) fell 20 cents, or 2 percent, to $10.18 after falling to an 18-year low of $9.50.

Martha Stewart Living Omnimedia (MSO) shares climbed 4.4 percent, or 65 cents, to $15.45, despite a Merrill Lynch downgrade based on concerns that its chief executive may have acted on inside information in trades she made in embattled biotech company ImClone System (IMCL) in December.

Analyst Karl Choi cut his ratings on shares of the media and merchandising company headed by home decorating diva Martha Stewart to intermediate-term "neutral" from "buy" and to long-term "neutral" from "strong buy."

Shares of software company Adobe Systems (ADBE) fell $4.82, or about 13 percent, to $31.37 after the company reported late on Thursday better-than-expected quarterly earnings, but forecast revenues below Wall Street's estimates.

Friday's trading action broke key technical support areas for the Dow, S&P and the Nasdaq.

Looking ahead to Monday, next support -- where buyers are expected to swoop in -- for the Dow is at 9,400. Support for the S&P is 993, and 1,475 for the Nasdaq, according to Schaeffer's Investment Research.

Technical resistance -- where sellers are expected to emerge -- is at 9,600 on the Dow, 1,020 on the S&P and 1,550 on Nasdaq. The levels are key elements of technical analysis, which studies prices, volume and charts.

Declining issues outnumbered advancers slightly more than to 7 on the New York Stock Exchange. Volume was heavy at 1.53 billion shares, up from 1.41 billion Thursday.

The Russell 2000 index, the barometer of smaller company stocks, rose 3.09, or 0.7 percent, to 459.07. For the week, the Russell fell 11.44, or 2.4 percent.

Overseas, market fell sharply Friday. Japan's Nikkei stock average declined 2.0 percent. In Europe, France's CAC-40 fell 2.9 percent, Britain's FTSE 100 dropped 3.0 percent, and Germany's DAX index plunged 3.7 percent.

Reuters and the Associated Press contributed to this report.