NEW YORK (CBSNewYork/AP) - The mixed economic signals driving the stock market's record-setting swings this week keep coming. But on Friday, even a survey showing Americans are dismayed about the economy didn't stop the gains on Wall Street.
The Dow Jones industrial ended the week on a high note and closed up 125 points., marking the first time in more than a month that the market has risen two days in a row.
It had been up more than 160 points earlier Friday after a government report consumers spent more on autos, furniture and gasoline in July, pushing up retail sales by the largest amount in four months. But the Dow briefly turned negative after a dismal survey on consumers' feelings about their personal finances and the economy.
The Reuters/University of Michgan survey of consumer sentiment fell to a 30-year low.
The retail sales data covered all of July, but financial markets didn't start their wild ride until July 22. The sentiment survey was taken over the past 10 days, as Americans watched the markets leap and dive on news about Europe's spreading financial crisis, the first-ever downgrade of the U.S.s long-term credit rating, signals that the job market improved slightly in July and strong earnings from a technology bellwether.
Normally, such a bad consumer survey would have pushed shares sharply lower for the day, said Quincy Krosby, an investment strategist with Prudential Financial.
"But these are not normal times," she said. Market volatility cuts both ways, sending shares way up or way down, Krosby noted. That can cause shares to defy economic data.
A separate government report on Friday showed that businesses increased their stockpiles of everything from raw materials to retail products for the 18th month in a row. Growing inventories are usually a sign of business confidence. But nervous consumers have held back recently; in June they cut their spending for the first time in nearly two years.
Markets worldwide gained on Friday despite a trade report Thursday that showed the economic slowdown might be a global phenomenon. France reported Friday that economic growth in the country slowed sharply in the second quarter.
The strong retail sales added to a recent trend of more positive data about the economy. The government said last week that hiring picked up in July after two dismal months, though employers still are adding jobs too slowly to significantly reduce unemployment. On Thursday, the government said that applications for unemployment benefits had fallen to a four-month low. But some analysts believe recently announced layoffs will cause that number to rise in the coming weeks.
If the market's gyrations spook consumers, fears that the economy might tip back into recession could become self-fulfilling, analysts said. People might cut back on spending just as retailers stock up for the crucial holiday season. Businesses would slash new orders, and demand for manufacturers' goods would dip.
Investors are already dizzy from seesaw trading. Shares have swung by hundreds of points each day this week as traders react to news about the economy, Federal Reserve policy and a financial crisis in Europe that could threaten U.S. banks.
High-speed trading by computers has contributed to the volatility, as shares hit high and low levels at which machines are programmed to buy or sell large numbers of shares.
Markets in Europe advanced on Friday and bank stocks recovered some of this week's losses. Regulators of major European exchanges banned the short-selling of financial company shares, protecting them from downward pressure by speculators. Asian markets closed mixed.
France's benchmark index, the CAC-40, rose 3.3 percent despite news that the nation's economy hit the brakes in the second quarter as exporters' wares piled up and consumers held onto their money.
Concerns about the French economy stoked fears about the crisis in the eurozone, where France has the second-largest economy after Germany's. As their heavily-indebted neighbors struggle to stay afloat financially, the region's economic powers are shouldering most of the costs of rescuing Greece, Portugal and Ireland from defaulting on their debts. A default would increase borrowing costs and hurt the regional currency.
If France's economy falters or if it loses its AAA credit rating, the nations might have trouble raising the money that they need to pay for future bailouts. Worries about debt issued by Italy and Spain, and the stability of banks there, have prompted the European Central Bank to buy their sovereign bonds to lower their borrowing costs.
Italy and Spain have Europe's third- and fourth-largest economies. The current bailout programs probably would be too small to rescue them from a potential default.
Most other major European markets rose by more than 3 percent, including Germany's DAX index, Italy's FTSE MIB and Spain's IBEX. London's FTSE index rose by more than 2 percent.
The gains followed a winning day on Wall Street that would have ranked as a stunning rally during any normal trading week.
The Dow Jones industrial average soared 423 points on Thursday. It had already fallen 634 points Monday, risen 429 Tuesday and fallen 519 Wednesday. Never before has the Dow had four 400-point swings in a row.
The S&P 500 finished up 4.6 percent and the Nasdaq composite index 4.7 percent.
The Standard & Poor's 500 index has risen or fallen at least 4 percent each day. That has not happened on four consecutive days since November 2008, the depths of the crisis.
American investors were encouraged before the market opened Thursday by news that new claims for unemployment benefits dropped below 400,000 for the first time in more than four months, signaling fewer layoffs and a job market that is improving slowly.
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