Stocks mostly rise as investors snap up financials

Stocks initially fell after the Labor Department reported that payrolls shrank more than predicted last month and that the unemployment rate reached a five-year high. But stocks that had been pounded lower, including a huge drop on Thursday, were suddenly more attractive to investors willing to make some bets.

The government said payrolls shrank by 84,000 last month, more than the 75,000 economists predicted, and higher than the 51,000 jobs lost in July. The unemployment rate rose to a five-year high of 6.1 percent from 5.7 percent.

The report confirmed Wall Street's fears that the economy continues to weaken. The nation has lost nearly 550,000 jobs so far this year, eroding investors' hopes for a late-year recovery.

"This was an ugly number that pretty much confirms that our economy continues to trend downward," said Jack Ablin, chief investment officer of Harris Private Bank. "I had thought things were stabilizing, and this just knocks the legs out of any hope of seeing much economic improvement right now."

But investors, with little conviction but willing to make a few bets, picked up some of the stocks hit in a sell-off Thursday, particularly banks and insurers. That lifted the market off its lows, but it was hardly a solid advance.

The Dow Jones industrial average rose 32.73, or 0.29 percent, to 11,220.96; the blue chips had been down 150 points at their lows of the session.

Broader stock ended mixed. The Standard & Poor's 500 index rose 5.48, or 0.44 percent, to 1,242.31, and the Nasdaq composite index fell 3.16, or 0.14 percent, to 2,255.88.

Friday's moves follow a dismal performance on Thursday in which all three major indexes moved back into bear market territory, defined as a 20 percent drop from a recent peak. The Dow plunged more than 340 points in a selloff underpinned by disappointing economic news and lackluster sales reports from retailers; the news drove home to investors that the economy was more troubled than many had thought.

For the week, the Dow lost 2.8 percent, its fourth straight week of losses and the biggest drop since late June. The S&P 500 gave up 3.2 percent and the technology-heavy Nasdaq, home to many stocks seen as riskier than the blue chips, fell 4.7 percent.