Stocks ended the first week of 2005 on the short side as much-expected jobs data failed to excite investors while Wall Street showed caution ahead of a slew of earnings reports next week.

The Dow Jones industrial average (search) closed down 18.92 points, or 0.18 percent, at 10,603.96. The Standard & Poor's 500 Index (search) ended down 1.70 points, or 0.14 percent, at 1,186.19. The Nasdaq Composite Index (search) was down 1.39 points, or 0.07 percent, at 2,088.61.

All three indexes ended the year's first week lower, which hasn't happened since 2001. Nasdaq ended the week down 4 percent, the S&P ended down 2.1 percent and the Dow ended off 1.7 percent.

The week's downward trend doesn't bode well for those who believe in the "January indicator," a maxim that claims the market's direction for the year can be divined by its performance over the first five days of January. While the January indicator works well for a positive week — the market has risen for the year 29 out of 34 years when the first week of trading was positive — a down week has equated to a down year only 10 out 20 years.

"It seems like our clients want to be engaged, want to be investing, but they're just not willing to step up right now," said Brian Belski, market strategist at Piper Jaffray. "But I think it's good people are being conservative. We're getting the selling out of the way now, and then we can buy on the fundamentals during earnings season."

The main focus of Friday's trading was December's jobs data, which caused a mixed reaction.

Investors were unsure how to read the latest Labor Department (search) job creation report, which showed 157,000 jobs created in December — less than the 175,000 expected, but still high enough to show continued growth in the labor market and hopefully stave off inflation and higher interest rates from the Federal Reserve (search).

"The jobs number was less than expected, but it still ended up for the year, and I think that was viewed very positively," said Brian Williamson, vice president of equity trading at the Boston Co. Asset Management

"But then you have to turn that into — what the Fed is going to do and how fast they're going to do it. December's figure may be some help for The Street in terms of how aggressive the Fed can be at this point."

With wage growth slipping, according to the Labor Department, and a wave of corporate earnings releases due next week, investors remained skittish about placing large bets. The major indexes drifted in and out positive territory throughout the session before settling slightly lower.

The market is now awaiting earnings season — which kicks off next week. "Maybe the market can reverse its fortune if it likes what it sees," said Williamson. "There's a lot of hesitation out there right now."

Traders said investors were taking profits in oil companies, which gained on Thursday following a surge in crude prices. U.S. crude for February delivery settled 13 cents lower at $45.43 a barrel.

Weighing on the market were energy-related stocks, including Exxon Mobil Corp. (XOM), down 33 cents at $49.79, and ConocoPhillips (COP) , 54 cents lower at $84.86.

In corporate news, health benefits company Wellpoint Inc. (WLP) rose 40 cents to $115.80 after it reduced its profit outlook and warned that its revenue would come in below Wall Street forecasts. The company blamed a strong response to its debt-retirement program, which will eat into earnings.

Taser International Inc. (TASR) said it is cooperating with an informal Securities and Exchange Commission (search) investigation into its accounting methods as well as safety claims with regard to its non-lethal stun weapons. Taser tumbled $4.90, or 17.74 percent, to $22.72.

Meanwhile, Berkshire Hathaway Inc. (BRK.A), the company run by billionaire Warren Buffett, said its General Re Corp. reinsurance unit received a subpoena from New York Attorney General Eliot Spitzer for information on insurance products that might help companies smooth earnings.

J.P. Morgan Chase (JPM) announced it will buy trade process automator Vastera Inc. (VAST) for $129 million in cash, or about $3 per share. J.P. Morgan Chase slipped 22 cents to $38.49, while Vastera surged $1, or 50 percent, to $3.

According to media reports, Sprint Corp. (FON) and British conglomerate Virgin Group are considering selling a stake in their wireless joint venture, Virgin Mobile USA, in an initial public stock offering. Sprint slipped 21 cents to $24.30.

Luxury retailer Tiffany & Co. (TIF) climbed $1.20 to $31.50 after reporting a 12 percent rise in holiday sales. Luxury retailers stood out with some of the best sales figure in an otherwise lackluster season for retailers.

Overall, trading was active, with 1.5 billion shares changing hands on the New York Stock Exchange, just above the 1.46 billion daily average for last year. About 2.2 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year. Stocks that declined outnumbered those on the rise by about 4-to-3 on the NYSE. Declining issues outpaced advancers by about 3-to-2 on Nasdaq.

The Russell 2000 index of smaller companies was down 6.61, or 1.07 percent, at 613.21.

Overseas, Japan's Nikkei stock average fell 0.51 percent. In Europe, Britain's FTSE 100 closed up 0.62 percent, France's CAC-40 climbed 0.56 percent for the session, and Germany's DAX index gained 0.36 percent.

Reuters and the Associated Press contributed to this report.