NEW YORK – A drop in the unemployment rate to its lowest in three years propelled the Dow Jones industrial average Friday to its highest close since before the 2008 financial crisis. The Nasdaq composite index hit an 11-year high.

The Dow jumped 156.82 points to 12,862.23, its highest mark since May 19, 2008, about four months before Lehman Brothers investment bank collapsed.

Before the market opened, the Labor Department said the economy added 243,000 jobs in January. It was the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent, the lowest since February 2009.

The surprising data gave financial markets a morning jolt that lasted throughout the trading day. The Nasdaq index closed 45.98 points higher at 2,905.66, its highest since December 2000, during the steep decline that followed the dot-com stock bubble.

The price of ultra-safe Treasury notes dropped, sending yields higher, and the price of oil rose for the first time in a week.

“In this economy, only one variable matters right now, and that variable is employment,” said Lawrence Creatura, an equity portfolio manager at Federated Investors. “This report was great news. It was beyond all expectations, literally. The number was higher than even the highest forecast.”

The Standard & Poor’s 500 index added 19.36 points, or 1.3 percent, to 1,344.90, its highest close since last July. The S&P 500 surged 2.2 percent for the week, its fifth straight week of gains. That’s the longest weekly winning stretch since January of 2011.

More evidence that the economy is gaining strength followed the jobs report. A trade group said the service industry expanded at the fastest pace since last February. The government also said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery.

Bank of America led the 30 stocks in the Dow, rising 5.2 percent. Only two stocks were lower: Merck and Procter & Gamble.

Treasury prices fell, lifting the yield on the 10-year note Treasury to 1.93 percent. When bond prices fall, yields rise. The benchmark 10-year rate had traded below 1.79 percent earlier this week as traders bought U.S. Treasurys on renewed concern over Europe’s ongoing debt crisis.

The U.S. jobs figures helped markets in Europe rally on Friday despite further evidence that the 17-country eurozone is heading for recession. Germany’s DAX closed 1.7 percent higher, and France’s CAC-40 gained 1.5 percent.

Among companies whose stocks made large moves:

• Genworth Financial soared 14 percent, the best gain in the S&P 500. The insurance company reported late Thursday that it swung to a profit in the most recent quarter, helped by gains in sales of life insurance.

• Weyerhaeuser gained 5.7 percent after reporting better quarterly earnings than analysts’ forecasts. The timber and real estate company’s earnings still sank 62 percent.

• Video game maker Take-Two Interactive Software Inc. rose 3 percent. The company reported a 65 percent drop in quarterly profits after the market closed Thursday, but Wall Street’s analysts expected much worse.

NEW YORK – It’s the best start for stocks in 15 years.

In what was mostly a slow and steady climb, the Dow Jones industrial average rose 3.4 percent in January and the Standard & Poor’s 500 gained 4.4 percent, the best performances for both indexes to open a year since 1997.

Investors were encouraged by modest but welcome improvement in the U.S. economy, including an 8.5 percent unemployment rate, the lowest in almost three years. Corporate profits didn’t wow anyone — except Apple’s — but they were good enough.

“I don’t see anything really glamorous or tremendous about the economy or earnings,” said Jerry Harris, chief investment strategist at the brokerage Sterne Agee. “But I think they’re very acceptable, and things are grinding along.”

An unexpected drop in consumer confidence dragged stocks down on the final day of the month. The Dow Jones industrial average finished down 20.81 points, or 0.2 percent, at 12,632.91.

The broader market fared better. The S&P barely finished in the red, declining 0.60 point to 1,312.41. The Nasdaq composite index rose 1.90 points to close at 2,813.84. The Nasdaq gained 8 percent for the month, its best January since 2001.

In January 1997, the last time stocks had such a fast start, the S&P gained 6.1 percent. Bill Clinton was inaugurated for his second term. An Asian financial crisis and “Titanic” lay ahead. Later that year, the Dow crossed 7,000 and 8,000 for the first time.

This January, analysts said, investors had such low expectations for the economy that it was easy for things to turn out better than expected.

“There are no big surprises,” said Kim Caughey Forrest, a senior equity analyst at money manager Fort Capital Group. “That’s the kind of ho-hum economy that we are in right now.”

The Dow closed at 12,217.56 at the end of last year, then started this year with a pop — a gain of 179.82 points on opening day. It was the kind of big swing investors became accustomed to in 2011.

Since then, it’s been a quiet ascent: 19 days in a row of moves of less than 100 points. The last time the Dow had such a placid stretch was a 34-day run that started Dec. 3, 2010.

Scottrade, the online brokerage, said stock buyers outpaced sellers among its clients for the first 14 trading days of the year, Jan. 3 to Jan. 23. It also said volume was 16 percent higher than December’s average.

For the month, the Dow added 415.35 points, its fourth straight month of gains and its largest January point gain.

On Tuesday, the Dow started up 66 points after encouraging signs from Europe that Greece might finally complete a deal to cut its crushing debt, a step toward securing a critical euro130 billion bailout payment.

Greece is negotiating with investors who bought its government bonds. They are expected to swap their bonds for new ones with half the face value, plus a lower interest rate and longer term of maturity.

Investors are increasingly worried that Portugal may need a similar deal with its private creditors. European leaders insist the Greek reduction is a one-time event. Portugal’s borrowing costs have risen to record highs.

The Dow lost its gains after consumer confidence fell to 61.1 in January, down from 64.8 in December. Economists had expected 68. The Conference Board said Americans are more worried about their incomes, gas prices and business conditions.

There were also signs that the housing market continues to struggle. Home prices fell in November for a third straight month in in 19 of the 20 cities tracked by the S&P/Case-Shiller index. The biggest declines were in Atlanta, Chicago and Detroit.

In the commodities market, investors worried that the confidence figure was a sign of weaker demand to come, and they sold industrial metals that have prices closely tied to the economy.

Copper for March delivery dropped 3.65 cents to $3.79 per pound, and March palladium ended down $2.15 at $686.35 per ounce. April platinum fell $28.20 to $1,588.10 an ounce.

The metals ended the day down after wild swings. Traders bid up prices in morning trading, encouraged by news that European officials were making progress to contain the financial crisis there, then sold hard on the confidence number.

“This is a day that every trader takes Tums,” said George Gero, vice president at RBC Global Futures.

Precious metal prices ended the day mixed. The price of gold rose, as it often does when it looks like the economy might shrink or the dollar might lose its value. Gold for April delivery gained $6 to finish at $1,740.40 an ounce.

In the bond market, the weak U.S. economic data and uncertainty about Greece lit up demand for safe investments. The benchmark 10-year Treasury yield dipped to 1.795 percent, its lowest close in almost four months.

The yield on the five-year Treasury note hit a record low for the second straight day, falling to 0.70 percent.

Treasury yields have been falling since last week, when the Federal Reserve said it expected to hold interest rates near zero into late 2014, more than a year longer than its last estimate, because the economic recovery will need help.

In corporate news:

• RadioShack Corp. stock plummeted 30 percent after the company said its profit fell sharply — 11 cents to 13 cents per share for the quarter that ended in December, down from 51 cents a year earlier and less than half what Wall Street was expecting.

• Best Buy Co. Inc., one of RadioShack’s competitors, responded by falling 5.6 percent, worst in the S&P. Both companies sell and service cellphones, but demand has softened at their stores.

• Avery Dennison Corp., which makes labels and packaging materials, fell 5.6 percent after it said earnings plunged 81 percent on nearly flat sales. Its 2012 outlook was well below Wall Street expectations.

• Mattel Inc. soared 5 percent because of strong demand for Barbie and Monster High dolls during the holidays. That boosted Mattel’s fourth-quarter profit by a better-than-expected 14 percent. The company also raised its dividend.

• U.S. Steel Corp. gained 5 percent after it reported strong demand for pipes from the oil industry from October through December. The company was also optimistic about this quarter.

• Agriculture conglomerate Archer Daniels Midland declined 3.6 percent after it reported an 89 percent drop in quarterly net income. The company said its results were weighed down by weakness in oilseeds, corn processing and agricultural services.

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AP Business Writers Stan Choe and Christopher Leonard contributed to this report.

NEW YORK – The stock market appeared headed Tuesday for its best January finish in more than a decade. An unexpected drop in consumer confidence dragged stocks down on the final day.

The Dow Jones industrial average was down 22 points at 12,631 just after 3 p.m. EST. The Standard & Poor’s 500 was down less than a point at 1,312. The Nasdaq composite index was up three at 2,814.

For the month, the S&P 500 is up 4.3 percent. That would be its best performance to start a year since a 6.1 percent gain in January 1997. Last year, the market added 2.3 percent in the first month.

Investors had such low expectations for the economy that it was easy for reports in January to come in better than expected, said Jerry Harris, chief investment strategist at the brokerage Sterne Agee.

But the news has mostly been good. Unemployment has fallen from a 10 percent peak in October 2009 to 8.5 percent, and the economy grew at a faster clip each quarter last year.

“I don’t see anything really glamorous or tremendous about the economy or earnings,” Harris said. “But I think they’re very acceptable, and things are grinding along.”

The Dow closed at 12,217.56 at the end of last year, then started this year with a pop — a gain of 179.82 points on opening day. It was the kind of big swing investors became accustomed to in 2011.

Since then, it’s been a quiet ascent: 19 days in a row of moves of less than 100 points. The last time the Dow had such a placid stretch was a 34-day run that started Dec. 3, 2010.

“Companies are reporting barely any increases in revenues and are just barely beating earnings forecasts. There are no big surprises,” said Kim Caughey Forrest, a senior equity analyst at money manager Fort Capital Group. “That’s the kind of ho-hum economy that we are in right now.”

On Tuesday, the Dow started up 66 points after encouraging signs from Europe that Greece might finally complete a deal to cut its crushing debt, a step toward securing a critical euro130 billion bailout payment.

Greece is negotiating with investors who bought its government bonds. They are expected to swap their bonds for new ones with half the face value, plus a lower interest rate and longer term of maturity.

Investors are increasingly worried that Portugal may need a similar deal with its private creditors. European leaders insist the Greek reduction is a one-time event. Portugal’s borrowing costs have risen to record highs.

The Dow lost its gains after the Conference Board reported that its consumer confidence index fell to 61.1 in January, down from 64.8 in December. Economists had expected 68.

There were also signs that the housing market continues to struggle. Home prices fell in November for a third straight month in in 19 of the 20 cities tracked by the S&P/Case-Shiller index. The biggest declines were in Atlanta, Chicago and Detroit.

Six of the 10 major categories in the S&P 500 were lower for the day. Telecommunications stocks, financial stocks, utilities and information technology stocks managed small gains.

Avery Dennison Corp., which makes labels and packaging materials, was the worst performer in the S&P, down 5.7 percent, after it said earnings plunged 81 percent on nearly flat sales. Its 2012 outlook was well below Wall Street expectations.

In the bond market, the weak U.S. economic data and uncertainty about Greece lit up demand for safe investments. The benchmark 10-year Treasury yield dipped below its lowest closing level in nearly four months.

The yield on the five-year Treasury note hit a record low for the second straight day, falling to 0.71 percent.

Treasury yields have been falling since last week, when the Federal Reserve said it expected to hold interest rates near zero into late 2014, more than a year longer than its last estimate, because the economic recovery will need help.

RadioShack Corp. stock plummeted 28 percent after the company said its profit fell sharply — 11 cents to 13 cents per share for the quarter that ended in December, down from 51 cents a year earlier and less than half what Wall Street was expecting.

Best Buy Co. Inc., one of RadioShack’s competitors, responded by falling 5.2 percent, among the S&P worst. Both companies sell and service cellphones, but demand has softened at their stores.

Among other stocks in the news:

• Mattel Inc. soared 5.2 percent because of strong demand for Barbie and Monster High dolls during the holidays. That boosted Mattel’s fourth-quarter profit by a better-than-expected 14 percent. The company also raised its dividend.

• U.S. Steel Corp. gained 4 percent after it reported strong demand for pipes from the oil industry from October through December. The company was also optimistic about this quarter.

• Agriculture conglomerate Archer Daniels Midland declined 4.6 percent after it reported an 89 percent drop in quarterly net income. The company said its results were weighed down by weakness in oilseeds, corn processing and agricultural services.

___

AP Business Writer Stan Choe contributed to this report.

NEW YORK – The stock market lost ground Tuesday but still appeared headed for its best January finish in more than a decade. An unexpected drop in consumer confidence dragged stocks down after a strong first half-hour.

The Dow Jones industrial average was down 42 points at 12,611 just after 11 a.m. EST. The Standard & Poor’s 500 was down three at 1,310. The Nasdaq composite index was down six at 2,805.

For the month, the S&P 500 is up 4.1 percent. That would be its best performance to start a year since a 4.1 percent gain in January 1999. Last year, the market added 2.3 percent in the first month.

The Dow had started the day up 66 points after encouraging signs from Europe that Greece might finally complete a deal to cut its crushing debt, a step toward securing a critical euro130 billion bailout payment.

Greece is negotiating with investors who bought its government bonds. They are expected to swap their bonds for new ones with half the face value, plus a lower interest rate and longer term of maturity.

A large majority of countries in the European Union agreed late Monday to sign a treaty designed to stop overspending. Europe’s debt problems remain the main worry in the markets.

Investors are increasingly worried that Portugal may need a similar deal with its private creditors. European leaders insist the Greek reduction is a one-time event. Portugal’s borrowing costs have risen to record highs.

Back home in the United States, investors have enjoyed a steady climb through January amid signs of an improving economy. Unemployment has fallen from a 10 percent peak in October 2009 to 8.5 percent.

The Dow lost its gains after the Conference Board reported that its consumer confidence index fell to 61.1 in January, down from 64.8 in December. Economists had expected 68.

There were also signs that the housing market continues to struggle. Home prices fell in November for a third straight month in in 19 of the 20 cities tracked by the S&P/Case-Shiller index. The biggest declines were in Atlanta, Chicago and Detroit.

Among stocks making big moves:

• RadioShack Corp. stock plummeted 28 percent. The company said it earned 11 cents to 13 cents per share for the quarter that ended in December. That’s down from 51 cents a year earlier and less than half what Wall Street was expecting.

• Mattel Inc. soared 6 percent because of strong demand for Barbie and Monster High dolls during the holidays. That boosted Mattel’s fourth-quarter profit by a better-than-expected 14 percent. The company also raised its dividend.

• U.S. Steel Corp. gained 4 percent after it reported strong demand for pipes from the oil industry from October through December. The company was also optimistic about this quarter.

• Agriculture conglomerate Archer Daniels Midland declined 4 percent after it reported an 89 percent drop in quarterly net income. The company said its results were weighed down by weakness in oilseeds, corn processing and agricultural services.

The Dow Jones industrial average was trading near its highest close since the 2008 financial crisis Thursday after solid news on factory orders and strong earnings from U.S. manufacturers highlighted the economy’s growing momentum.

Broader market indexes edged lower, though they have surged this year, too. Traders appear less afraid of spillover damage from the European debt crisis, and data on jobs and manufacturing have been consistently strong.

“With global risk off center stage and attention going back to the fundamentals, this market was ready to explode, which is exactly what it is doing,” said Doug Cote, chief market strategist with ING Investment Management.

Before the market opened, the government reported that unemployment claims rose only modestly last week after a steep decline the week before. The long-term trend still indicates an improving job market.

Orders to factories for long-lasting manufactured goods increased in December for the second straight month, and a key measure of business investment rose solidly.

That strong demand was apparent in quarterly earnings reports from U.S. manufacturers. 3M stock rose 1.1 percent after its fourth-quarter profit beat Wall Street’s estimates.

Caterpillar, the world’s biggest heavy equipment maker, soared 2.5 percent, the most of the 30 companies in the Dow, after beating analysts’ estimates last quarter. It said it expects to do the same this year, as global demand remains high.

The Dow Jones industrial average was up 27 points, or 0.2 percent, at 12,783 just after 11 a.m. EST. 3M, Caterpillar and Kraft Foods led the gains.

The Dow is within reach of its 2011 high of 12,810, reached in April. The last time it closed higher than that was on May 20, 2008, when it settled at 12,826. The Dow is up nearly 5 percent so far this year. The S&P 500 and Nasdaq have gained even more.

The Dow would need to rise another 11 percent to get to its record high close of 14,164, reached on Oct. 9, 2007.

The Standard & Poor’s 500 index fell three points to 1,323. It was dragged lower by volatile financial companies and telecommunications firms. The Nasdaq composite index shed six points to 2,812.

AT&T fell 2.4 percent, by far the most of the 30 companies in the Dow, after its earnings missed Wall Street’s forecasts. The company remains heavily dependent on the Apple iPhone, which it pays to subsidize, but recently lost its exclusive rights to sell the phone in the U.S.

Stocks had their highest close in eight months Wednesday after the Federal Reserve said it plans to keep interest rates extremely low until late 2014 to encourage lending and investment and support the economic recovery.

The announcement lifted investments across many markets and continents. Bond prices rose in the U.S. and Europe. So did commodities, the euro, emerging market currencies and European stocks.

The yield on the 10-year Treasury note fell to 1.95 percent from 1.99 percent late Wednesday. The prospect of more bond-buying by the Fed helped make Treasurys more attractive. A bond’s yield falls as demand for it increases.

A strong bond auction by Italy also brightened Europe’s outlook, signaling to investors that lenders believe Italy will not be dragged into the debt crisis. And Greece resumed talks with its lenders over writing off some of its crushing debt.

Benchmark indexes in France, England, Germany and Italy rose 1 to 2 percent.

Among the other U.S. companies making big moves after reporting quarterly earnings:

• Time Warner Cable Inc. rose 7 percent after the company reported earnings that were far above analysts’ estimates. The national cable TV provider also raised its dividend 17 percent to 56 cents per share and announced plans to buy back more of its own stock.

• United Continental Holdings, the parent company of United and Continental airlines, surged 7.4 percent. It said the cost of integrating the two companies fell. Its fourth-quarter loss narrowed, and its adjusted earnings were more than double what analysts had expected.

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Follow Daniel Wagner at www.twitter.com/wagnerreports.

NEW YORK (Reuters) – Stocks posted their best week since Christmas, even with a mixed finish on Friday after strong earnings from tech bellwethers IBM (IBM.N) and Intel (INTC.O) contrasted with Google's (GOOG.O) disappointing report.

The market heads into the most hectic week so far in this earnings season after a mixed start, with some worries over revenue and growth offset by sharp cost-cutting to protect the bottom line.

For the week, the Dow rose 2.4 percent and the S&P 500 gained 2 percent as investors showed some relief that earnings didn't reflect the worst elements that battered the market in the last year, especially given the problems in the euro zone that have been weighing on investor sentiment.

"For the time being, investors are pretty much taking earnings in stride. They knocked Google down this morning, but the general feeling in the marketplace is (stocks) are very undervalued at these levels, even given the marginal misses they're making in earnings," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

Indeed, investors in recent weeks have been heartened by improving economic data, even though progress has been uneven. Reflecting improved economic sentiment, the Dow Jones Transportation Average, an indicator of the economy's strength (.DJT) has gained about 2 percent in each of the last two weeks.

IBM (IBM.N) lifted the Dow a day after it offered a strong outlook and results from several big-tech names signaled they were shaking off nervousness about economic growth and boosting technology spending. IBM's stock rose 4.4 percent to $188.52.

On the flip side, Google Inc (GOOG.O) slid 8.4 percent to $585.99. The Internet search giant's quarterly profit and revenue missed expectations on declining search advertising rates.

The Dow Jones industrial average (.DJI) gained 96.50 points, or 0.76 percent, to 12,720.48 at the close. The Standard & Poor's 500 Index (.SPX) inched up just 0.88 of a point, or 0.07 percent, to 1,315.38. But the Nasdaq Composite Index (.IXIC) dipped 1.63 points, or 0.06 percent, to close at 2,786.70.

NASDAQ UP ALMOST 3 PCT FOR WEEK

For the week, the Nasdaq climbed 2.8 percent, making this its best week in seven.

General Electric Co (GE.N) was unchanged at $19.15 after the conglomerate's revenues missed consensus forecasts. Fellow Dow component American Express Co (AXP.N) fell 1.8 percent to $50.04 as it set aside more money to cover bad loans.

Intel Corp (INTC.O) rose 2.9 percent to $26.38, while Microsoft Corp (MSFT.O) advanced 5.7 percent to $29.71. Both reported results late Thursday.

Still, in what could be seen as a more bearish sign for the earnings period, 60 percent of the S&P 500 companies that have reported results so far this earnings season have beaten profit expectations, below the 68 percent that beat estimates at this point in the reporting cycle for the third quarter and well below the 78 percent that exceeded estimates in the second quarter, according to Thomson Reuters data.

That's based on results from just 14 percent of the S&P 500 companies. But strategists say it could be a sign of what's in store for the rest of this earnings season and perhaps future quarters.

During the session, investors also kept an eye on Greece, where a bond-swap deal between the cash-strapped country and its private bondholders appeared to be close, according to sources. An agreement was deemed possible heading into the weekend. Creditors could lose up to 70 percent of the loans given to the fiscally troubled nation.

Hopes are an agreement would prevent the nation from spiraling into bankruptcy and bring some stability to the debt-strained euro zone.

Volume totaled about 7 billion shares traded on the New York Stock Exchange, the NYSE Amex and the Nasdaq, above the daily average of 6.68 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of not quite 3 to 2 while on the Nasdaq, about three stocks rose for every two that fell.

(Reporting By Caroline Valetkevitch; Editing by Jan Paschal)

NEW YORK – A surprisingly strong report on the housing market and the prospect of more cash for the International Monetary Fund to fight off a financial crisis powered stocks Wednesday to their highest close since last summer.

The Standard & Poor’s 500 index closed above 1,300 for the first time since July 28, and the Dow Jones industrial average finished at its highest since July 25. That was just before the bitter fight in Washington over the federal debt limit.

It was also the first time since Jan. 3, the first trading day of the year, that the S&P 500 moved more than 1 percent. The market has made a quiet ascent since then. The S&P is up 4 percent for the year, the Dow 3 percent.

“We think things are setting up to be better than last year,” said Brad Sorensen, director of market research at Charles Schwab. “The worst-case scenario is off the table.”

The National Association of Home Builders index, a measure of sentiment among builders, rose to its highest level since June 2007 as sales jumped. Analysts said it could be a sign the housing market has bottomed out.

The index is rising because builders are seeing a rise in people shopping for a home, not because they are seeing more sales, at least not yet. Those in a position to buy are benefiting from lower prices and mortgage rates.

Stocks of home construction companies jumped. PulteGroup Inc. rose 6 percent, Toll Brothers Inc. rose 5 percent, and KB Home rose 8 percent.

In another encouraging sign, the Federal Reserve said manufacturing rose 0.9 percent from November to December, the biggest gain since December 2010.

Christine Lagarde, managing director of the IMF, said the fund wanted to raise $500 billion more to lend to countries. The IMF has put up roughly a third of the rescue loans to debt-hobbled European countries over the past two years.

Investors are eager for signs that the world can contain Europe’s debt problem. Besides an already likely recession in Europe, a messy default by Greece or another country could lead to a financial crisis around the globe.

In other trading, Goldman Sachs stock added almost 7 percent after its quarterly profit beat Wall Street expectations. Net income still fell 58 percent in the last three months of 2011, a result of choppy financial markets.

Some bank stocks followed Goldman higher. Morgan Stanley, another investment bank, rose 6.8 percent. Bank of America rose 4.9 percent, JPMorgan Chase 4.7 percent and Citigroup 2.9 percent.

Other financial stocks sank after disappointing earnings reports. State Street Corp. plunged 6.6 percent, the largest fall in the S&P 500. PNC Financial Services Group Inc. fell 2.6 percent, and Northern Trust Corp. slipped 2 percent.

The Dow finished up 96.88, or 0.8 percent, at 12,578.95. The S&P rose 14.37, or 1.1 percent, to 1,308.04. The Nasdaq composite index, which has outperformed the other two this year, rose 41.63 points, or 1.5 percent, to 2,769.71.

Among other stocks making large moves Wednesday:

• Yahoo climbed 3 percent on news that co-founder Jerry Yang is leaving the struggling Internet pioneer. The departure clears the way for newly hired CEO Scott Thompson to take more radical action to shake up the company.

• Amphenol Corp., which makes fiber-optic cables, soared 11 percent. Its earnings that beat analysts’ expectations, and the company said strong orders should push next year’s earnings above Wall Street forecasts.

• Linear Technology Corp., which makes circuits, jumped 11 percent, most in the S&P 500. It expects quarterly revenue to rise 4 to 8 percent following strong demand in December and January. It also raised its dividend by a penny to 25 cents a share.

• Cash America International Inc., a payday lender and operator of pawnshops, sank 6 percent after cutting its earnings forecast.

NEW YORK – The best week for the stock market in more than two years ended with major indexes nearly unchanged on Friday.

A surprise drop in the U.S. unemployment rate sent stocks higher in early trading, but the gains fizzled throughout the afternoon. European stock indexes and the euro rose after German Chancellor Angela Merkel made a speech pushing for tighter rules on government spending.

The Dow Jones industrial average dropped 0.61 of a point to close at 12,019.42. The Dow ended the week up 7 percent, the largest weekly gain since July 2009.

Bank stocks rose the most. JPMorgan Chase & Co. jumped 6.1 percent, the most among the 30 stocks in the Dow average. Morgan Stanley leapt 6.9 percent, the second-biggest gain of any stock in the S&P 500 index.

The unemployment rate fell to 8.6 percent last month, the lowest level in 2 1/2 years. Economists had expected the rate to stay at 9 percent. But a key reason the unemployment rate fell so much was that more than 300,000 people gave up looking for work and were no longer counted as unemployed.

Germany’s Merkel said the 17 countries that use the euro must quickly restore market confidence by making financial controls stricter. Bond yields for Spain and Italy fell, a sign that investors are becoming more confident in the ability of those countries to pay their debt. France’s CAC-40 and Britain’s FT-SE each rose 1.1 percent.

The Nasdaq composite index inched up 0.73 to 2,626.93. The Standard & Poor’s 500 index fell 0.31 of a point to 1,244.28. The S&P surged 7.4 percent over the week, the most since March 2009.

Decisive steps by world leaders to right Europe’s teetering economy sent stocks soaring on Wednesday. The Dow jumped 490 points, its biggest gain since March 2009 and its seventh-largest one-day point gain in history. The weekly point gain of 787 in the Dow was the second-biggest in its history, following a 946-point gain in October 2008.

“This market has been gripped with fear for a long time,” said Peter Cardillo, chief market economist at Rockwell Global Capital. “And I think some of these fear factors are beginning to dissipate.”

This week’s strong stock performance is partially a reflection of the market’s increased volatility since August, when concerns that Europe’s debt was spinning out of control made dramatic stock price swings the norm. On Monday the S&P 500 broke a 7-day slide that had taken the index down 7.9 percent.

The improvements in the U.S. job market are “another illustration that the US economy is, for now at least, shrugging off the global economic downturn and fears about the collapse of the euro-zone,” Capital Economics Chief U.S. Economist Paul Ashworth said in a note to clients.

Merkel and French President Nicolas Sarkozy will meet Monday to discuss changes to European Union treaties. The talks will culminate in a Dec. 9 summit of EU leaders, where the proposals are expected to be debated and detailed. Analysts say stricter controls on spending could encourage the European Central Bank to offer more short-term help for governments struggling with their debts.

If the European Central Bank takes a larger role in buying government debt, “it will certainly be a relief to markets,” Cardillo said, “and maybe even mean Europe avoids falling into a deep recession. Not that it’s going to cure all the problems of Europe.”

In corporate news:

• Western Digital Corp. soared 7.5 percent, the most in the S&P. The data storage provider raised its revenue estimate for the current quarter and said that recovery efforts at its facility in Thailand following massive flooding there were proceeding faster than had been expected.

• Big Lots Inc. slumped 8.7 percent, after the retailer reported a 76 percent plunge in income because of lower margins and a loss related to a newly acquired Canadian business. The company buys overstocked items including food and housewares and sells them at a discount.

• H&R Block Inc. fell 6.4 percent. The country’s largest tax-preparation company reported a wider quarterly loss late Thursday. H&R Block also said there was a jump in claims tied to bad loans made by its former subprime mortgage unit.

NEW YORK – The worst week for the stock market in two months ended with a whimper in thin trading Friday.

The Dow Jones industrial average lost 4.8 percent this week, while the broader Standard & Poor’s 500 index fell 4.7 percent. Both had their worst weeks since Sept. 23.

Major indexes wavered throughout Friday’s session, which was shortened because it’s the day after Thanksgiving. Worries about Europe’s debt crisis flared up again after Italy had to pay 7.8 percent to borrow for two years at a debt auction. It’s another sign that investors are increasingly hesitant to lend to European countries.

The euro slipped to $1.32, losing 2 percent this week against the dollar. The drop puts the euro at its lowest level since Oct. 4.

Higher interest rates on government debt of Italy, Spain and other European countries have rattled stock markets in recent weeks. When borrowing costs climb above the 7 percent threshold, it deepens investor fears about a government’s ability to manage its debts. Greece, Ireland and Portugal had to seek financial lifelines when their interest rates crossed the same mark.

The Dow fell 25.77 points, or 0.2 percent, to close at 11,231.78. Of the Dow’s 30 stocks, Chevron Corp. lost 1.6 percent Friday, the biggest drop. Travelers Cos. Inc. added 1.2 percent, the largest gain.

The S&P 500 lost 3.12 points, or 0.3 percent, to 1,158.67. The Nasdaq composite dropped 18.57, or 0.8 percent, to close at 2,441.51.

Trading volume was 1.6 billion, less than half the daily average.

Markets were battered this week as governments in Europe and the U.S. struggle to tackle their debts. The Dow lost 248 points on Monday as a Congressional committee failed to reach a deal to cut federal budget deficits. It plunged 236 points Wednesday after investors balked at buying German government debt.

Retailers traded mixed on the Friday after Thanksgiving, the traditional start of the holiday shopping season and usually the busiest day of the year for retailers. Amazon.com Inc. dropped 3.5 percent. Wal-Mart Stores Inc. inched up 0.4 percent.

A record number of people were expected to show up at stores this weekend to take advantage of deep discounts. The National Retail Federation estimates that 152 million people will go shopping over the three days starting on Friday. That would be an increase of 10 percent from last year.

AT&T’s stock dipped less than 1 percent. The company said Thursday that it is budgeting to pay $4 billion in break-up fees if its attempted $39 billion takeover of T-Mobile USA from Deutsche Telekom falls apart.

Four stocks fell for every three that rose on the New York Stock Exchange.