Stocks Sputter As Investors Take Profits After Two-day Climb

NEW YORK (MarketWatch) -- U.S. stocks on Friday turned tail on early gains as investors resorted to profit-taking after a two-day rise amid mixed economic data, including slight payrolls growth in November and a drop in consumer sentiment in December.

"We're looking at a market that is getting a little overstretched, so I wouldn't be surprised to see some profit-taking," said Peter Cardillo, chief market economist at Avalon Partners.

Up at the start, the Dow Jones Industrial Average was more recently off 3.5 points at 13,616.4, 16 of its 30 components trading lower, with American Express Co. fronting the blue chip's drop, its shares down 3.8%.

Alcoa Inc. led the Dow's minority advance, its stock climbing 2.2%.

The S&P 500 fell 1.77 points to 1,505.57, while the technology-heavy Nasdaq Composite fell 7.95 points to 2,701.08.

Ahead of the opening bell, the Labor Department reported the addition of 94,000 nonfarm payroll jobs last month and said the unemployment rate held steady at 4.7%. Economists expected the rate to climb to 4.8%. .

The data "points to an economy that is not slipping into a recession anytime soon, but we're likely to see some sort of a pullback here because most of the news is already digested, and a rate cut is already priced in," said Cardillo.

A later survey released by Reuters and the University of Michigan had consumer sentiment continuing to drop in December, with an index falling to 74.5 last month from 76.1 in November. The latest reading proved worse than the forecasted 75 level, and is the second lowest since 1992. .

On the New York Mercantile Exchange, crude-oil futures fell, with the contract for January delivery recently off $1.81 at $88.42. .

Elsewhere on the NYME, gold futures declined $6.7 to $800.7.

A shipping delay for one of its products was among the factors weighing on one tech stock, with Palm Inc. shares off 18.1% in the wake of its late-Thursday announcement, which included word of a net loss for its latest quarter. .


European stocks returned to gains after a one-day hiatus, helped by Thursday's strong finish for U.S. stocks. .

In Asia, stocks closed mostly higher. .

By Kate Gibson