Wall Street Pares Gains After Run-Up

Stocks gave up sizable gains Friday to fluctuate in the final hour of trading as Wall Street seemed likely to cap a big week quietly.

The Dow Jones industrial average had risen 150 points earlier in the session after Federal Reserve Chairman Ben Bernanke gave investors more reason to believe further interest rate cuts could be on the way. The tech-dominated Nasdaq composite index was lower after weak quarterly results from Dell Inc.

The market's fizzle Friday was perhaps to be expected following several sessions of sharp gains.

In a speech late Thursday, Bernanke said persistently tight credit conditions, the housing slump and high energy prices will probably create some "headwinds for the consumer in the months ahead," and the central bank will have to be "exceptionally alert and flexible."

The comments echoed those of Fed Vice Chairman Donald Kohn earlier in the week, which helped Wall Street recover some of its recent steep losses. Investors read Bernanke's words as a sign that the Fed is willing to lower interest rates again after cutting them at the past two meetings.

"Although the U.S. is in the eye of the credit storm, we've seen the Fed cut rates and we've heard from Bernanke that they're prepared to do so again if necessary," said Robert Jukes, global equity strategist at Collins Stewart in London.

The Fed meets again Dec. 11, and a rate cut could help reinvigorate the slowing economy. Evidence of a more reticent consumer came Thursday in a Commerce Department report that showed consumer spending rising a modest 0.2 percent in October, the slowest pace in four months.

The risk of rising inflation had been keeping the central bank cautious about loosening its policy. But that risk is looking less threatening now, given that oil prices have dipped below $90 a barrel for the first time since October and that the Commerce Department said core personal consumption expenditures have risen 1.9 percent year-over-year. Core PCE is one of the Fed's preferred inflation measures, and anything between 1 and 2 percent is considered a comfortable rate.

In late afternoon trading, the Dow rose 38.69, or 0.29 percent, to 13,350.42.

Broader stock indicators were mixed. The Standard & Poor's 500 index rose 8.42, or 0.57 percent, to 1,478.14, and the Nasdaq composite index fell 12.55, or 0.47 percent, to 2,655.58.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.29 billion shares.

Government bonds fell as investors pulled their money out of the safe securities and put it back into stocks. The yield on the benchmark 10-year Treasury note, which moves opposite the price, rose to 3.96 percent from 3.94 percent late Thursday.

Crude oil prices fell $2.30 to settle at $88.71 per barrel _ their lowest levels in more than a month _ on the New York Mercantile Exchange.

The Dow is on pace to post its biggest weekly point gain since March 2003. After a sharp drop Monday that pulled the blue-chip index more than 10 percent below its record close, investors have piled on more than 600 points over the past four sessions. In addition to lifted chances for a rate cut, embattled financial companies like Citigroup Inc., Freddie Mac and E-Trade Financial Corp. announced strategies to raise cash _ building investors' confidence that credit problems may be on the mend.

However, the pace of the recovery _ and the remaining uncertainty about mortgages and credit availability _ raises questions about its sustainability. And despite the week's gains, stocks are poised to end November lower because of heavy declines amid worries about credit. The Dow began the session off 4.4 percent for November.

Gains in the technology sector are being limited by a murky outlook from Dell Inc., as well as by cautious comments on Research In Motion Ltd. from Piper Jaffray and a wary Goldman Sachs note on technology in general, according to Peter Boockvar, equity strategist at Miller Tabak.

The broader market is "being helped out by the hopes for a rates cut and the prospect of the government getting involved in fixing adjustable interest rates," he said.

Dell fell $3.93, or 14 percent, to $24.21, while Research In Motion fell $8.22, or 6.7 percent, to $113.86.

Other stocks that were the most actively traded and that showed the biggest gains on the New York Stock Exchange were ones that have been battered in recent months because of their link to mortgage troubles. The moves followed reports that the White House and major banks may be nearing a pact that would temporarily freeze interest rates on some subprime home loans, reducing the likelihood of default or foreclosure.

Countrywide Financial Corp. jumped $1.50, or 16.1 percent, to $10.80; Washington Mutual Inc. rose $1.43, or 7.9 percent, to $19.44; Freddie Mac rose $5.63, or 19.1 percent, to $35.14; and Citigroup Inc. rose $1.03, or 3.2 percent, to $33.32.

Other gainers were cell phone maker Motorola Inc. which said Edward J. Zander will step down as chief executive on Jan. 1 and President and Chief Operating Officer Greg Brown will take his place. Motorola has been trying to turn around its business amid falling sales and weak earnings. Its shares rose 21 cents to $15.86.

And Morgan Stanley rose 30 cents to $52.64, after ousting co-President Zoe Cruz late Thursday and moving co-President Robert Scully to the newly created Office of the Chairman.

The Russell 2000 index of smaller companies rose 5.29, or 0.69 percent, to 771.35.

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

Stocks gained overseas. Japan's Nikkei stock average rose 1.08 percent, and Hong Kong's Hang Seng index rose 0.57 percent. Britain's FTSE 100 rose 1.31 percent, Germany's DAX index rose 1.36 percent, and France's CAC-40 rose 1.29 percent.

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