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Wall Street ended a volatile week with a moderate rebound Friday after better-than- expected economic data at least temporarily eased the worries of investors concerned about housing and the financial sector. Financials fell again on continued worries about the health of balance sheets, while technology stocks advanced. A day after a sharp drop in existing-home sales aided in pushing stocks sharply lower, economic news helped buoy the market on Friday.

The Commerce Department reported that factory orders for big-ticket manufactured goods, such as cars, appliances and machinery, rose by 0.8 percent in June, the strongest gain in four months and well ahead of Wall Street's expectations. But outside demand for defense equipment, orders would have been up only 0.1 percent. Another Commerce Department report showed that new-home sales dropped by a smaller-than-expected 0.6 percent to a seasonally adjusted annual rate of 530,000 units; the market expected sales to total 505,000. Although it marked the seventh decline in the past eight months, it stirred some hope that the housing market could be finding a bottom. Orders for durable goods rose 0.8% last month, far better than the 0.4% decline expected.

And there was good news about consumers, whose spending accounts for more than two-thirds of U.S. economic activity. The Reuters/University of Michigan index of consumer sentiment for the first part of July came in at 61.2, while economists forecast a reading of 56.4. The reading was a slight rebound from a 28-year-low last month. "This is a market that's looking for any good signs," said John Massey, a fund manager at AIG SunAmerica Asset Management. "People are trying to find the light at the end of the tunnel."

Some experts said, however, that trading is likely to be uneven in the coming days as Wall Street awaits Friday's July employment report. Linda Duessel, equity market strategist at Federated Investors, said economic figures such as the durable-goods numbers are important because they reveal continued demand from abroad, which could help U.S. companies continue to rake in profits even if the U.S. economy isn't running at full steam. "That's good news for market participants as we try to find a footing in the market because we really don't want to see our weakness leak outside the U.S.," she said.

The Dow Jones industrial average rose 21.41 points Friday, to 11,370.69, rebounding slightly from Thursday's decline of more than 280 points. Broader stock indicators also rose. The Standard & Poor's 500 index advanced 5.22, to 1257.76, and the technology-heavy Nasdaq composite index jumped 30.42, to 2310.53. For the week, the Dow fell 1.1 percent and the S&P 500 lost 0.2 percent. Friday's tech rally left the Nasdaq up 1.2 percent for the week. Oil fell $2.23 to settle at $123.26 a barrel. Crude prices have fallen more than $20 in recent weeks, alleviating some of Wall Street's concerns about the impact of inflation on consumers' ability to spend.

The stock market's volatility during the week—rallying Tuesday and Wednesday only to erase those gains Thursday—illustrates tentativeness behind some of the bets investors are making, said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. He said the market tends to react to the latest headlines. "It's just news sensitive, and the real question is, 'What's the next news going to be? Good or bad?' That means that the market doesn't have a trend or a direction. It depends entirely on whether the news is going to be good or bad on any given day and that doesn't give you, as an investor, a lot of confidence."

For the second consecutive session, financial-services stocks were hard hit, with Dow components Bank of America losing 3.5 percent and Citigroup falling more than 1 percent. For the year, each is down more than 28 percent.

Europe gains: European stocks posted their first back-to-back weekly gains since May as better-than-estimated earnings and lower oil prices fueled a rally in carmakers, and banks climbed on speculation credit-market losses will abate. Europe's Dow Jones Stoxx 600 Index increased 0.4 percent this week, extending its rebound from a three-year low on July 15 to 5.7 percent.

Asia falls: In Asia, stocks fell the most in six weeks, snapping a four-day rally. The MSCI Asia-Pacific index lost 2.8 percent. The index rallied 5.9 percent in the first four days of this week as concerns eased that bank losses will expand and oil tumbled.

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Photos courtesy of AFP, AP Photo/Ed Ou & Bebeto Matthews, and Independent.ie

Original Source: Chicago Tribune and NY Daily News