By CHRISTINA REXRODE, Associated Press
NEW YORK (AP) — The market had a wishy-washy Friday, capping an equally directionless week.
Stocks inched down for most of the day. Then, with 45 minutes of trading left, the Dow Jones industrial average turned positive. The Standard & Poor's 500 and the Nasdaq composite soon followed. All ended the day slightly higher.
In a week with no major developments in Europe's debt crisis, and no surprising reports on the U.S. economy, the market struggled to figure out which way to go. The three indexes rose incrementally on Monday and Tuesday and were mixed on Wednesday and Thursday.
In a market that has grown used to triple-digit swings on the Dow, this week brought none — the first time since early May that that's happened. It was a marked change from the same week a year ago. Back then, the Dow swung by triple digits every day, including one plunge of 634 points, after a downgrade of the U.S. debt rating. This week, the biggest move was a measly 51-point rise on Tuesday.
With many money managers on vacation, trading volume was low. "The sound of silence" is how Bank of America Merrill Lynch economist Ethan Harris labeled a note to clients Friday.
Sure, there were piecemeal signs about the world economy for anyone who was looking. But they were less than decisive.
The second-quarter earnings season continued to wind down calmly, with most companies coming in ahead of profit predictions. But China reported a troubling slowdown in its export growth. And the so-called fiscal cliff of 2013, when government spending cuts and higher taxes kick in, looms larger now that earnings season is out of the way.
"There are three big elephants in the room," said Marty Leclerc, chief investment officer of Barrack Yard Advisors in Bryn Mawr, Penn. "A slowdown in Asia growth, the European crisis ... and the U.S. 'fiscal cliff.' "
To be sure, stocks have risen fairly steadily since the U.S. debt downgrade last August. Compared to a year ago, the Dow Jones industrial average is up 23 percent.
Friday, the Dow ended up 42.76 points at 13,207.95. The S&P 500 rose 3.07 to 1,405.87. The Nasdaq composite rose 2.22 to 3,020.86.
But the stock market's relative good cheer doesn't necessarily mean the underlying economy is improving. Instead, the market gains are more a sign that central banks like the Federal Reserve are still willing to artificially prop up the economy, said Bill Strazzullo, chief market strategist at Bell Curve Trading outside Boston.
"You've got every central bank out there saying, 'We're going to print as much money as it takes, we're going to buy as many bonds as it takes,' " Strazzullo said.
Europe, the cause of so much market consternation for so many months, was quiet. Benchmark indexes fell slightly in France, Germany and Spain. Italy's long-term borrowing costs jumped, a sign that investors are nervous about its ability to pay its debts.
Manchester United, the white-hot British soccer club, had a lethargic debut as a public company. The stock closed exactly where it opened, at $14, likely a sign that investors are worried about its heavy debts.
A few stocks did make big moves. J.C. Penney jumped 6 percent, rising $1.30 to $23.40, after CEO Ron Johnson laid out more of his vision for turning around the struggling department store company. Lions Gate, the movie and TV studio, gained 21 cents to $13.46, after reporting a revenue surge thanks to "The Hunger Games."
Chesapeake Energy fell 3 percent, slipping 63 cents to $19.68, after reporting that the government is investigating possible antitrust violations surrounding its purchase of oil and gas land in Michigan. Yahoo fell 5 percent, losing 86 cents to $15.15, after revealing that shareholders might not get a payout that the company had previously planned.
China reported that its export growth slumped to 1 percent in July from more than 11 percent in June, as debt-burdened Europe pulled back on buying Chinese goods.
Dan Heckman, senior vice president at U.S. Bank wealth management in Kansas City, wondered if China's next exports report would show exports shrinking, rather than just growing more slowly.
"You don't have far to go from 1 to zero, or from 1 to negative," he said mid-afternoon, when shares were trading lower. "Frankly, we're a little surprised that the stock market isn't down more."
China is the world's second-largest economy and a major player among world markets. Throughout the recession and its aftermath, as other countries struggled, China kept growing and helped prop up everyone else.
Friday's data was just the latest sign of cracks in the country's armor. Thursday, China said that growth had also slowed in its auto sales and factory output.
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