Stocks mixed on bailout clash; tech slides

Demand for safe-haven buying in government debt remained high as investors uneasily watched events in Washington.

Some lawmakers are concerned about the cost of the proposal, and they balked at the plan after congressional leaders said Thursday they had reached an agreement in principle. Shortly after Friday's opening bell on Wall Street, President Bush said at the White House lawmakers can express doubts but ultimately should "rise to the occasion" and approve a plan to stave off what he sees as an economic calamity.

The rescue is designed to remove billions of dollars of bad mortgages and other now-toxic assets from the books of financial firms in a bid to free up lending. Tight lending conditions make it harder and more expensive for businesses and consumers to borrow money, a headwind for the economy.

Volume was relatively light Friday as many investors chose to just wait.

"I think the markets are on pause trying to figure out where this is going to go. Congress is still there," said Mark Coffelt, portfolio manager at Empiric Funds in Austin, Texas. "Right now everyone is a little bit shellshocked."

With no deal in place as trading ended Friday, investors were likely to be uneasy throughout the weekend. And there was no way to predict whether Monday morning would bring calmer markets after weeks of intense volatility, or whether the turbulence would accelerate. Even if a deal is reached over the weekend, its terms likely would determine how the markets start the week.

Credit markets remained strained Friday, though they showed improvement. The yield on the 3-month Treasury bill, considered the safest short-term investment, rose to 0.87 percent from 0.72 percent late Thursday. The lower the yield on a T-bill, the more desperation there is in the market; investors are at times willing to take the slimmest returns to preserve their principal. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.84 percent late Thursday.

The Dow rose 121.07, or 1.10 percent, to 11,143.13. Gains by JPMorgan Chase & Co. and Bank of America Corp. gave support to the 30-stock index. Most of their advance came late in the session as investors placed bets that a deal would emerge from Washington over the weekend. But with so much uncertainty, the big banks are seen as the most secure, and therefore likely to withstand whatever problems lie ahead.

Broader indicators were mixed. The Standard & Poor's 500 index rose 3.83, or 0.32 percent, to 1,213.01, and the technology-heavy Nasdaq composite index fell 3.23, or 0.15 percent, to 2,183.34.