Mirroring the performance seen in the previous session, stocks turned in a relatively lackluster performance during trading on Friday after failing to sustain an initial upward move. Lingering concerns about the financial situation in Europe contributed to the choppy trading.
The major averages eventually ended the session mixed, with the Dow closing just below the unchanged line. The Dow edged down 2.42 points or less than a tenth of a percent to 11,866.39, while the Nasdaq rose 14.32 points or 0.6 percent to 2,555.33 and the S&P 500 climbed 3.91 points or 0.3 percent to 1,219.66.
Despite the mixed performance on the day, the major averages all closed lower for the week. The Dow posted a weekly loss of 2.6 percent, and the Nasdaq and the S&P 500 dropped by 3.5 percent and 2.8 percent, respectively.
While stocks initially moved higher amid a drop by European bond yields, buying interest waned not long after the open. Late day weakness in Europe contributed to the subsequent pullback by the U.S. markets.
Traders seemed reluctant to make any significant moves going into the weekend, as any news out of Europe could quickly make them regret their decision.
Nonetheless, the markets largely shrugged off news that Fitch Ratings affirmed France's AAA credit but revised the rating outlook to Negative from Stable.
Fitch said the negative outlook is prompted by the heightened risk of contingent liabilities to the French state arising from the worsening economic and financial situation across the Eurozone.
The ratings agency also placed its credit ratings for Belgium, Spain, Slovenia, Italy, Ireland and Cyprus on rating watch negative.
In U.S. economic news, the Labor Department released a report on consumer prices in November, showing that prices unexpectedly came in unchanged amid another notable decrease in energy prices.
The report showed that the consumer price index was unchanged in November after edging up by 0.1 percent in October. Economists had expected the index to increase by 0.1 percent.
Among individual stocks, shares of Adobe Systems (ADBE) rose by 6.6 percent after the software developer reported stronger than expected fourth quarter results. The company also forecast first quarter and full year 2012 results in line with analyst estimates.
On the other hand, shares of Research in Motion (RIMM) came under pressure after the mobile device maker reported better than expected third quarter earnings but provided disappointing fourth quarter guidance.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index ended the day up by 1.4 percent.
Meanwhile, the major European markets came under pressure going into the close, ending the day in the red. While the U.K.'s FTSE 100 Index fell by 0.3 percent, the German DAX Index dropped by 0.5 percent, and the French CAC 40 Index slid by 0.9 percent.
In the bond market, treasuries showed a strong move to the upside on the day, extending a recent upward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.9 basis points to a two-month closing low of 1.854 percent.
While most of the major sectors ended the day showing only modest moves, significant strength was visible among airline stocks. Reflecting the strength in the airline sector, the NYSE Arca Airline Index surged up by 3.5 percent to its best closing level in over a month.
US Airways (LCC) helped to lead the airline sector higher, advancing by 8.2 percent, while Delta (DAL) and JetBlue (JBLU) also posted strong gains.
Oil service stocks also saw considerable strength, resulting in a 2 percent gain by the Philadelphia Oil Service Index. Cameron (CAM) turned in one of the sector's best performances after reaching a settlement with BP (BP) regarding the Deepwater Horizon accident.
Gold, steel, railroad, and health insurance stocks also posted notable gains on the day. Among health insurance stocks, Centene (CNC) rose by 7.5 percent after forecasting 2012 earnings toward the high end of analyst estimates.
Developments in Europe are likely to remain in focus next week, although traders are also likely to keep an eye on U.S. reports on housing starts, new and existing home sales, weekly jobless claims, and durable goods orders.
On the earnings front, Oracle (ORCL), Nike (NKE), General Mills (GIS), ConAgra Foods (CAG), KB Home (KBH), and Walgreen (WAG) are among the companies that are due to release their quarterly results next week.
Nonetheless, trading activity is likely to be relatively subdued, as some traders are likely to be away from their desks ahead of Christmas.
For comments and feedback: editorial@rttnews.com