NEW YORK – Blue-chip stocks inched up but technology shares declined Friday, as investors weighed massive disappointment over a surprisingly weak employment report against hopes for a longer period of low interest rates.
The Dow Jones industrial average (search) ended up 7.55 points, or 0.07 percent, at 10,595.55. The technology-laced Nasdaq Composite Index (search) fell 7.48 points, or 0.36 percent, at 2,047.63. The Standard & Poor's 500 Index (search) finished up 1.99 points, or 0.17 percent, at 1,156.86. It was the third up session for the S&P 500.
For the week, the Dow rose 0.11 percent, while the S&P 500 gained 1.05 percent. The Nasdaq rose 0.90 percent, breaking a six-week long losing streak.
The session began after the Labor Department (search) reported that the economy added a scant 21,000 jobs for February, far short of the 125,000 economists expected. In addition, the January figure was revised from 112,000 to 97,000, and the unemployment rate remained stalled at 5.6 percent in February.
The immediate response was impressive — the Dow plunged more than 60 points in the first minutes of trading. But a second look at the overall economy prompted buying, particularly in defensive sectors such as finance and healthcare, and sent the major indexes seesawing in a broad range throughout the morning.
"I think you have investors taking heart that the jobs figures means that the Federal Reserve (search) will leave interest rates intact for longer," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "People are more inclined to seize on that theory than on the lack of jobs in the economy."
"Investors liked the fact that rates are likely to stay low," said Tim Swanson, chief investment officer at City Wealth Management. "The other side of the argument is that employment growth is weak, consumer confidence will stay low, and maybe the economy is not as strong as the other indicators have led investors to believe."
Shares of Martha Stewart Living Omnimedia Inc. (MSO) plunged late in the session after a jury found Martha Stewart (search) guilty of lying to investigators about her sale of stock in biotech company ImClone Systems Inc. (IMCL).
The guilty verdict on domestic trendsetter Stewart, ending a seven-week trial, surprised investors who had run the stock up to a 20-month high earlier in the session. The shares closed down about 23 percent and was the biggest percentage loser on the New York Stock Exchange.
"People were speculating the verdict was going to come out differently," said Art Hogan, chief market analyst with Jeffries & Co. "This is the result when folks speculate on things such as this."
Dow component Intel Corp. (INTC) cut its first-quarter sales forecast late Thursday, blaming a seasonal sales slump and its transition to new products. The stock dropped 70 cents to $28.95. With the technology sector having led much of the 2003 rally, the reduced outlook from this bellwether doesn't bode well for a sustained market rally any time soon, said Bill Groenveld, head trader at vFinance Investments.
"We need another sector to take hold of this market or we'll continue to drop to the wayside," Groenveld said. "But nothing's poking its head out yet, so you get everybody moving into defensive positions. At least they're staying in the market and willing to ride it out."
Sun Microsystems Inc. (SUNW) lost 23 cents to $4.93 after Standard & Poor's cut the company's bond rating to junk status.
McDonald's Corp. (MCD) jumped $1.01, or 3.5 percent, to $29.85 after the company said worldwide sales at its fast-food restaurants opened more than a year rose 13.9 percent in February, amid improvement in its primary U.S. market.
TiVo Inc. (TIVO)gained 59 cents, or 5.15 percent, to $12.05. The company posted a narrower quarterly loss on growing demand for subscriptions to its television recording service and said it will double its customers this year, outpacing analysts' views.
Trading was moderate to busy, with 1.37 billion shares changing hands on the New York Stock Exchange, just below the 1.4 billion daily average for last year. About 2 billion shares were traded on Nasdaq, above the 1.8 billion daily average last year.
Advancers outnumbered decliners 2 to 1 on the NYSE, while they were evenly matched on Nasdaq.
The Russell 2000 index of smaller companies rose 1.16, or 0.2 percent, to 599.54.
Overseas, Japan's Nikkei stock average rose 1.2 percent. In Europe, Britain's FTSE 100 finished 0.3 percent lower, France's CAC-40 lost 0.4 percent for the session, and Germany's DAX index closed down 0.2 percent.
Reuters and the Associated Press contributed to this report.