NEW YORK — U.S. stocks on Friday ended virtually flat after a two-day winning streak, as an unexpected drop in retail sales and high anxiety over the fate of investment bank Lehman Brothers Holdings Inc. weighed on investor sentiment.
“There seems to be no end to the shoes that keep dropping around the financial-services companies — obviously we are dealing with an octopus — and we just aren’t sure who is next,” said Kevin Giddis, managing director, Morgan Keegan & Co.
After dropping more than 150 points, the Dow Jones industrial average declined 11.72 points, or 0.1 percent, to end at 11,421.99, giving the blue-chip index a 1.8 percent gain on the week.
Of the Dow’s 30 components, 14 ended in the red, with the losses led by insurance giant American International Group Inc., down 30.8 percent on worries the world’s largest insurer may be downgraded by ratings agencies.
AIG is among the companies thought to be holding mortgage-backed debt that has plagued the financial-services industry for more than a year, said Marc Pado, U.S. market strategist at Cantor Fitzgerald.
“The market remains skittish around concerns about the economy and financial sector,” said Bill Stone, chief investment strategist at PNC Financial Services Group Inc.
Blue-chip retailers also felt pressure, with shares of Wal-Mart Stores Inc. down 1.2 percent.
Alcoa Inc. advanced the most on the Dow, up 3.8 percent, with General Motors Corp. also gaining, up 2 percent.
The S&P 500 rose 2.65 points, or 2.7 percent, to 1,251.70, up 0.8 percent from last Friday’s close.
Consumer discretionary, financials and health care fronted sector declines on the S&P, and energy, utilities and materials led the losses among the index’s 10 industry groups.
The Nasdaq Composite climbed 3.05 points, or 0.1 percent, to end at 2,261.27, giving it a 0.2 percent gain on the week.
During a volatile session, the major indexes shaved their steep losses and flirted briefly in positive territory as the financial sector wavered back lower after a stint in the green.
Shares of Zions Bancorporation were a standout, charging 11.5 percent higher. Zions on Thursday said it sold 7.2 million shares for $250 million.
Volume on the New York Stock Exchange topped 1.3 billion, with advancers passing declining issues by a 9-to-7 ratio. On the Nasdaq, 824 million shares exchanged hands, and decliners edged just ahead of advancers.
The market in large part remains fixated on Lehman, which is still soliciting bids for its asset management business despite reports the entire bank is being sold, people familiar with the situation told Dow Jones Newswires.
Lehman shares fell 13.5 percent.
Shares of Washington Mutual Inc. fell 3.5 percent, dropping after the nation’s largest thrift said late Thursday that it is well-capitalized.
