Stocks pull back on jobless report

Stocks retreated again Friday after readings on jobs and manufacturing -- the first reports for the third quarter -- indicated that businesses and workers still face a tough economy. The major indexes ended a turbulent week narrowly mixed.

A massive quarterly loss at General Motors and rising oil prices also gave investors reason to trade cautiously.

The market was much calmer than in the first four sessions of the week, when the Dow Jones industrials rose or fell by triple digits each day in response to economic data or financial-sector news.

Although Friday’s reports were not as bad as Wall Street had anticipated, they portrayed an economy still sagging as it entered the second half of the year. The Labor Department said payrolls shrank for a seventh straight month, losing a net 51,000 jobs in July, while the unemployment rate rose to 5.7%. The data arrived after the government’s Thursday report of an unexpected jump in weekly unemployment claims to a five-year high.

“It reinforces the idea that we’re seeing a steady, but not dramatic, decline in employment, which is likely to last for some time,” said Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn.

The Institute for Supply Management said manufacturing activity was flat in July. Given a disappointing report Thursday on economic growth, many investors are becoming more certain that the country is in a recession.

There also was more bad news about construction as the Commerce Department reported that building activity declined in June.

And the price of oil rose $1.02 to $125.10 a barrel.

The Dow fell 51.70 points, or 0.5%, to 11,326.32, ending the week down 0.4%.

Broader stock indicators also lost ground Friday. The Standard & Poor’s 500 index fell 7.07 points, or 0.6%, to 1,260.31, and the Nasdaq composite index fell 14.59 points, or 0.6%, to 2,310.96.

Advancing issues, however, narrowly outnumbered decliners Friday on the New York Stock Exchange.

For the week the S&P; gained 0.2% and the Nasdaq rose slightly.

Yields on government bonds edged lower Friday. The benchmark 10-year Treasury note fell to 3.93% from 3.95% late Thursday.

The dollar was mixed against other major currencies, while gold prices fell.

Nine of the 10 industry groups in the S&P; 500 retreated, with financial companies posting the only advance.

Bond insurer Ambac Financial Group soared $1.27, or 50%, to $3.79 after it agreed to pay $850 million to eliminate one of its largest exposures to risky debt instruments. Rival bond insurer MBIA shot up $1.74, or 29%, to $7.67.

Among other financial stocks, Wachovia surged $1.71, or 9.9%, to $18.98, and Lehman Bros. Holdings jumped $1.31, or 7.6%, to $18.65.

The flagging economy has sapped consumers’ ability to spend freely, which in turn is hurting profits at many companies, including GM, which lost $15.5 billion in the second quarter, more than analysts had predicted. Shares of GM fell 84 cents, or 7.6%, to $10.23.

Among other market highlights:

* The Russell 2,000 index of smaller-company stocks rose 1.64 points, or 0.2%, to 716.16.

* Overseas, key stock indexes fell 2.1% in Japan, 1.1% in Britain, 1.3% in Germany and 1.8% in France.