Stocks rose in the first week of 2012, even though news that the U.S. jobless rate neared a three-year low did not whet interest in equities on Friday.
The U.S. market came into the new year revisiting familiar themes, with signs the U.S. economic recovery was gathering speed taking some of the focus off of lingering concerns about the euro zone's debt crisis.
The news coming out of Europe was negative all week and we're going to finish up, and I think that's a real good performance in light of the background, said Jack de Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
The Dow rose 1.2 percent, the S&P gained 1.6 percent and the Nasdaq added 2.7 percent for the week, with most gains coming from cyclical sectors tied to growth.
Among the week's largest gainers the KBW bank index <.BKX> jumped 5.7 percent, in contrast with the 2.7 percent fall in the top gauge of European bank stocks <.SX7P>.
Data this week painted a rosier picture on the labor, housing and retail markets, auguring a recovery in growth in 2012. The government's report on non-farm payroll jobs for December earlier on Friday was the latest in a list of economic numbers that were stronger than anticipated.
On Friday the Dow and S&P edged lower. Worries about higher bond yields in Italy and Spain, as well as potential oil supply disruptions in the Middle East, were cited as giving investors a pause.
Next week brings bond sales by Italy and Spain. Caution ahead of those auctions sent Italian benchmark yields above 7 percent while yields in Spain's 10-year paper also edged up to end the week at 5.758 percent.
Worries on Wall Street over rising borrowing costs in some euro zone countries kept buying in check on Thursday and Friday.
There were a lot of fireworks earlier in the week and perhaps there's a little bit of nervousness going into the weekend with Europe and Iran as concerns, said Jim Russell, regional investment manager for U.S. Bank Wealth Management in Cincinnati. It feels like a tired market.
On Friday, the Dow Jones industrial average <.DJI> dropped 55.78 points, or 0.45 percent, to 12,359.92. The S&P 500 Index <.INX> fell 3.25 points, or 0.25 percent, to 1,277.81. The Nasdaq Composite <.IXIC> gained 4.36 points, or 0.16 percent, to 2,674.22.
Volume remained weak, with about 6.3 billion shares exchanging hands on the New York Stock Exchange, the Nasdaq and Amex, compared with last year's daily average of 7.84 billion shares.
Investor angst receded and the CBOE volatility index <.VIX> fell almost 12 percent this week.
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Roughly eight stocks fell for every seven that rose on the NYSE, while on the Nasdaq slightly more than six issues declined for every five posting gains.
(Reporting by Rodrigo Campos; Editing by Kenneth Barry)