Volatile week ends with gains for stocks

Wall Street ended a volatile week with a late-in-the-day comeback Friday in the major stock indexes after investors set aside some concerns about the banking sector and the health of the overall economy.

Share prices appeared headed for their seventh decline in eight sessions before the major indexes, which had flip-flopped all day, turned higher in the last half-hour. The late advance marked a reversal from sell-offs in the final hour of trading in four of the previous five sessions.

Financial stocks fell on continuing concerns about credit-market turmoil. And giving investors more reason for worry, FedEx lowered its earnings outlook for the current quarter and full year, and Starbucks slashed its fourth-quarter profit estimate after reporting a decline in customer traffic at stores open more than a year.

But tech stocks saw gains as Cisco Systems said it planned to repurchase an additional $10 billion in stock, and an analyst upgraded Hewlett-Packard. And rising oil prices gave a boost to energy stocks. “You can certainly come up with a list of the top 10 reasons why we should be down,” said Art Hogan, chief market strategist at Jefferies & Co. in Boston, arguing that the rally indicated that the market had fallen excessively.

The Dow Jones industrial average rose 66.74 points, or 0.5%, to 13,176.79. The Standard & Poor’s 500 index rose 7.59 points, or 0.5%, to 1,458.74. The Nasdaq composite index rose 18.73 points, or 0.7%, to 2,637.24.

Despite the gains in the major indexes, declining issues outnumbered advancers by about 6 to 5 on the New York Stock Exchange. And the Russell 2000 index of smaller-company stocks fell 2.10 points, or 0.3%, to 769.50.

Friday’s gains helped the Dow and the S&P; 500 avoid a third straight weekly decline. For the week, the Dow rose 1%, the S&P; 500 gained 0.3% and the Nasdaq climbed 0.4%.

Government bond yields rebounded Friday after sharp declines Thursday. The yield on the 10-year Treasury note rose to 4.17% from 4.14% late Thursday. The dollar ended mixed against other major currencies, while gold prices fell slightly.

Federal Reserve Gov. Randall Kroszner suggested that the Fed wouldn’t need to reduce interest rates further to help the economy weather a “rough patch” in the coming year.

But investors only slightly scaled back their expectations for a cut in the central bank’s key rate. Based on trading in interest-rate futures, the odds of a quarter-point cut to 4.25% at the Fed’s Dec. 11 meeting fell to 84% from 94% on Thursday.

Oil prices climbed on speculation that the Organization of the Petroleum Exporting Countries has lost control of prices. Crude futures rose $1.67 to $95.10 on the New York Mercantile Exchange.

Economic reports released Friday seemed to offer investors little reason to bid stocks higher. Industrial output fell 0.5% in October, more than expected and the sharpest decrease in nine months. The decline reflected a big drop in utility output and continued troubles in sectors tied to automobiles and housing.

There was no sign in Friday’s uneven trading that long-simmering credit-market concerns were easing.

Fannie Mae fell $2.35, or 5.5%, to $40.69 after falling 10% on Thursday. The mortgage giant’s finance chief said some of the $670 million in third-quarter provisions for credit losses on soured home loans would probably be reversed.

Other corporate news weighed on the markets. FedEx fell $4.57, or 4.5%, to $96.80 after the company lowered its forecast because of rising fuel costs and a troubled U.S. freight market.

And Starbucks fell 93 cents, or 3.9%, to $23.17 after the coffee retailer reported its first-ever decline in customer traffic at stores open more than a year. The company also said it planned to slow the pace of U.S. store openings.

The technology and energy sectors lent support to the overall market.

Cisco rose 64 cents, or 2.2%, to $29.94 after the maker of networking equipment said it would expand its stock buyback program to $62 billion. Hewlett-Packard gained $1.85, or 3.8%, to $50.75 after Morgan Stanley upgraded the stock.

Yahoo climbed $1.40, or 5.5%, to $26.82 on renewed speculation that the company might be acquired by Microsoft, whose shares rose 33 cents to $34.09.

In the energy sector, Chevron, ConocoPhillips and Marathon Oil were upgraded by Deutsche Bank after the brokerage’s oil economist raised his projection for the average price of oil next year to $80 a barrel.

Chevron climbed $1.82, or 2.2%, to $85.98, ConocoPhillips gained 89 cents, or 1.1%, to $78.93 and Marathon increased $3.11, or 5.7%, to $57.51. The S&P; 500 Energy index gained 1.7%.

Refiner Sunoco rose $2.77, or 4%, to $71.49 after Sanford C. Bernstein & Co. upgraded the stock and boosted its forecast for refining margins in 2008 and 2009.

In other market highlights:

* Agilent Technologies jumped $3.02, or 9%, to $36.72 for the top gain in the S&P; 500. The maker of scientific-testing equipment reported fourth-quarter profit and sales that topped analysts’ estimates after winning more orders from drug firms.

* Overseas, key stock indexes fell 1.1% in Britain, 0.7% in Germany and France, 1.6% in Japan and 4% in Hong Kong.