NEW YORK (Reuters) – U.S. stocks seesawed in a tight range on Thursday, with winners and losers taking their cues from earnings reports, while a drop in jobless claims continued to point to a slowly healing labor market.

Healthcare shares were among the losers, with underwhelming quarterly reports from drugmaker Merck & Co Inc (MRK.N), insurer Cigna Corp (CI.N) and medical device maker Boston Scientific Corp (BSX.N). Merck fell 1.3 percent to $38.14, Cigna dropped 5.7 percent to $43.10 and Boston Scientific was off 7 percent to $5.67.

The S&P healthcare sector (.GSPA) fell nearly 1 percent and was the largest weight on the benchmark S&P 500 index.

Technology shares continued to outperform the broader market, with Qualcomm Inc (QCOM.O) hitting its highest level in 12 years after first-quarter profit trounced estimates. Shares gained 2.1 percent to $60.84 after hitting a high of $61.95.

MasterCard Inc (MA.N) rose near 5.6 percent to $377.84 after the payment processor beat analysts' estimates for the seventh straight quarter.

Investor sentiment was helped as the economy, on an uptrend of late, got another boost as new claims for jobless benefits dropped more than expected in the latest week. The government will report monthly payrolls data Friday.

"Investors are focusing on what they should, which is the improving backdrop in the U.S. economy," said Bruce Zaro, chief technical strategist, Delta Global Asset Management in Boston.

The Dow Jones industrial average (.DJI) was down 33.45 points, or 0.26 percent, at 12,683.01. The Standard & Poor's 500 Index (.SPX) was down 1.07 points, or 0.08 percent, at 1,323.02. The Nasdaq Composite Index (.IXIC) was up 4.50 points, or 0.16 percent, at 2,852.77.

Zaro expects the current uptrend for the S&P 500 to take it to 1,370 in the first half of the year, but the index could pull back before then at around the 1,330 level.

Green Mountain Coffee Roasters Inc (GMCR.O) soared 22.1 percent to $65.45 a day after its first-quarter earnings far exceeded expectations.

The third warmest January in 50 years hurt same-store sales at department stores and apparel retailers. But discounters such as Target and Costco as well as high-end stores beat estimates.

Target Corp (TGT.N) rose 1 percent to $51.94 while Abercrombie & Fitch Co (ANF.N) slumped 11.6 percent to $41.39, and Costco Wholesale Corp (COST.O) was up 2.2 percent at $85.02.

Facebook could raise as much as $10 billion in the biggest-ever Internet initial public offering, according to a filing Wednesday. In 2011, Facebook said net income rose 65 percent to $1 billion on revenue of $3.71 billion.

(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)

NEW YORK (Reuters) – Stocks edged higher on Thursday after weekly jobless claims fell in the latest week, but gains were limited as investors were reluctant to make big bets ahead of Friday's payrolls report and a recent rally.

Coming off a surge of nearly 1 percent in the previous session that built on advances of more than 4 percent in January, some traders said the market might be nearing a top.

In the latest data on employment sector, new claims for unemployment benefits dropped more than expected to a seasonally adjusted 367,000 versus the forecast of 375,000.

Economists forecast that the government report on Friday will show that 150,000 jobs were added in January, a decline from the previous month, which benefited from holiday hiring.

"The jobless claims continue the trend of decent news, though there have also been other indications of a general loss of momentum," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland. "That suggests we're in the right ballpark with estimates for the jobs report, but also that we aren't likely to see a huge upside surprise."

The Dow Jones industrial average (.DJI) was up 3.18 points, or 0.03 percent, at 12,719.64. The Standard & Poor's 500 Index (.SPX) was up 2.84 points, or 0.21 percent, at 1,326.93. The Nasdaq Composite Index (.IXIC) was up 14.14 points, or 0.50 percent, at 2,862.41.

The third warmest January in 50 years hurt same-store sales at department stores and apparel retailers. But discounters such as Target and Costco as well as high-end stores beat expectations.

Target Corp (TGT.N) rose 1.1 percent to $51.98 while Abercrombie & Fitch Co (ANF.N) slumped 12.3 percent to $41.08, and Costco Wholesale Corp (COST.O) was up 2.2 percent to $85.05.

The S&P Retail index (.RLX) added 0.3 percent.

"The level of retail spending indicates consumers are becoming more cautious when it comes to spending money," McCain said. "There could be a pause in that source of economic improvement."

Drugmaker Merck & Co Inc (MRK.N) fell 1.4 percent to $38.08 after fourth-quarter sales missed expectations and it forecast flat full-year results.

Dow Chemical Co (DOW.N) posted weaker-than-expected profit and revenue, sending shares down 1.2 percent to $33.54.

Green Mountain Coffee Roasters Inc (GMCR.O) surged 16 percent to $62.23 a day after its first-quarter earnings far exceeded expectations.

U.S. Federal Reserve Chairman Ben Bernanke faced tough questioning by members of the House Budget Committee after his testimony on the state of the economy.

Facebook could raise as much as $10 billion in the biggest-ever Internet initial public offering, according to a filing Wednesday. In 2011, Facebook said net income rose 65 percent to $1 billion on revenue of $3.71 billion.

(Reporting by Ryan Vlastelica; Editing by Jeffrey Benkoe)

(Reuters) – The captains of Wall Street have picked a presidential candidate for 2012 and it is Republican Mitt Romney, rather than Democratic President Barack Obama, campaign donation records show.

The records released Tuesday by the Federal Election Commission illustrate a basic shift in political giving at the presidential level by the nation's financial elite.

After a fling with Obama – the charismatic Democrat embraced four years ago during the severe credit crisis that erupted under President George W. Bush – Wall Street is backing Romney in a return to its largely Republican inclinations.

Romney's six largest campaign contribution sources in 2011 were executives, family members and affiliated political action committees of Goldman Sachs, JPMorgan Chase, Morgan Stanley, Credit Suisse, Citigroup and Bank of America, according to the Center for Responsive Politics, a Washington, D.C.-based group that monitors campaign finances.

The center said that the leaders of the six Wall Street giants — which were rescued from ruin by U.S. taxpayers about three years ago — have given $1.8 million to the Romney campaign.

As for Obama, Goldman Sachs was the sole major financial firm ranked among his top 20 contribution sources for 2011, with gifts of just $64,000 compared with $496,000 to Romney.

As they line up behind Romney, banks and investment firms are being joined by a new generation of hedge fund and private equity managers with deep pockets.

They are backing the candidate who comes from their ranks — Romney, a former private equity executive.

"The financial industry has preferred Romney from the beginning when he started his campaign," said Viveca Novak, spokesperson for the center. "He is of their world. They believe he understands them. So, not surprising they would favor him."

Newt Gingrich, Rick Santorum and Ron Paul, the other three Republican presidential contenders, have received very limited support from the financial sector.

FINANCE ON TOP AGAIN

As usual, the finance/insurance/real estate sector is leading all others on the campaign donors list, the center said.

Even after the 2008 financial crisis and the 2010 passage of the Dodd-Frank laws that put new restrictions on the banks and markets, "the power of Wall Street in Washington is unmitigated," said Richard Parker, a public policy lecturer at Harvard University's Kennedy School of Government.

The sector had donated more than $23 million to presidential campaigns as of December 5, the center said. And there are nine months to go before the elections for president and Congress.

Wall Street money, like funds from other walks of life, is pouring in both as traditional campaign donations, which are limited to $2,500 per donor, and as unlimited gifts to Super PACs.

The Super PACs are the legacy of a 2010 Supreme Court decision that unlimited donations by individuals, corporations and unions to groups that operate independently from campaigns.

Working through Super PACs, a few wealthy managers of top hedge funds and private equity firms are pumping money into the political process at unprecedented levels.

Seven of them have given more than $5 million combined to Restore Our Future, a Super PAC that backs Romney. That was more than Obama's Super PAC, called Priorities USA, raised in all of last year. Priorities USA's donor list is topped by labor unions.

Leading supporters of Romney from the financial industry include hedge fund managers Robert Mercer, Julian Robertson, Paul Singer and Chris Shumway, as well as private equity leaders Miguel Fernandez and Steven Webster.

Each has given at least $250,000 to the pro-Romney Super

PAC.

Hedge funds and private equity firms also have been a key source of traditional campaign gifts to Romney.

He has taken in more than $850,000 from executives at firms such as HIG Capital, Blackstone Group, Elliott Management, Citadel Investment and Bain Capital, the firm he co-founded.

NEW PLAYERS ARRIVE

Private equity and hedge fund managers arrived on the political scene in 2005.

That was when Congress began scrutinizing the "carried interest" tax break that lets these managers pay a tax rate on much of their earnings that is much lower than the top U.S. income tax rates.

The first private equity lobbying group was set up in 2006, a month after Democrats won control of both houses of Congress.

More than five years later, the "carried interest" tax break remains in place, although Democrats still say they may seek to eliminate it as part of a plan to trim the federal budget.

Hedge funds and private equity firms are keen to protect the tax break, while Wall Street banks want to roll back portions of Dodd-Frank or, at least, minimize the costs and restrictions it imposes on them as U.S. regulators continue to implement it.

Democrats' threats to close the carried interest loophole, coupled with their strong support for Dodd-Frank regulations and Obama's frequent verbal jabs at the banks, have opened a rift between him and the industry that briefly embraced him three years ago, said American University Professor Leonard Steinhorn.

When Obama came to power, the industry assumed it would have cozy ties with him, as it had with President Bill Clinton in the 1990s.

At first, it did. Then the economy tanked and Obama began to criticize bankers for their role in the credit crisis. Such criticism from a president was a jolt to leading bankers, who were accustomed to flattery from Washington.

"These are people who were totally alienated from Obama when he stopped praising them. Some of them got bitter. These are folks with large egos who like to be stroked," Steinhorn said.

Many bankers have felt uneasy in recent years with the social conservatives who have gained power in the Republican Party, but the bankers likely feel they can relate to Romney, analysts say.

"Romney is one of them," Steinhorn said. "So they can feel comfortable with him."

(Editing by David Lindsey and Cynthia Osterman)

NEW YORK (Reuters) – Stocks extended January's rally, climbing more than 1 percent, on Wednesday after upbeat global manufacturing data and as Greece neared a long-delayed deal on its debt.

An index of the U.S. manufacturing sector rose in January to its highest level since June, an industry group said, while China's factory sector expanded slightly, confounding expectations for a contraction. Germany recorded its first rise in manufacturing output in four months.

"Manufacturing numbers are what the market is jumping on," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York.

Stocks also got a boost after Greek Finance Minister Evangelos Venizelos said talks between Athens and its private creditors were "one formal step away" from a deal needed to avoid a messy default.

U.S. and European banks rallied on the news. Bank of America (BAC.N) gained 3.6 percent to $7.39 and Citigroup (C.N) rose 3.8 percent to $31.88.

Homebuilder shares advanced after U.S. data showed construction spending surged in December to its highest level in more than 1-1/2 years. An index of housing stocks (.HGX) rose 1.5 percent.

The Dow Jones industrial average (.DJI) rose 138.65 points, or 1.10 percent, to 12,771.56. The S&P 500 Index (.SPX) gained 14.33 points, or 1.09 percent, to 1,326.74. The Nasdaq Composite (.IXIC) added 32.03 points, or 1.14 percent, to 2,845.87.

After the S&P 500 rose 4.4 percent last month, some traders see the benchmark index near a short-term top. Wells Fargo's Manley said the index is "near the upper end of a trading band," with a top below 1,350.

"I'd rather own stocks than not, but on a year horizon," he said, indicating stocks could pull back in the near term.

Amazon (AMZN.O) slid 9.1 percent to $176.61 a day after the online retailer warned of a possible first-quarter loss and posted a steep drop in fourth-quarter profit.

According to Thomson Reuters data, with 228 companies having

reported results, 61 percent have beaten expectations – below the 70 percent beat rate of recent quarters.

Whirlpool (WHR.N) surged 15.6 percent to $62.80 after giving an optimistic full-year outlook.

Facebook was expected to submit paperwork to regulators for a $5 billion initial public offering and selected Morgan Stanley (MS.N) and four other bookrunners to handle the IPO, sources told Reuters unit IFR.

Morgan Stanley shares gained 5.1 percent to $19.60.

(Reporting by Rodrigo Campos; editing by Kenneth Barry)

NEW YORK (Reuters) – Stocks fell on Tuesday as optimism over a possible deal by Greece in its debt wrangling dissipated after a batch of weaker-than-expected economic reports.

Hopes that Greece would reach a deal with private creditors on a debt swap and receive a bailout to sidestep a chaotic default boosted market sentiment initially.

But data showing home prices fell more than expected in December, business activity in the Midwest grew at a slower rate than anticipated and consumer confidence unexpectedly fell undermined the early positive tone.

"The consumer confidence decline sort of lends credence to this argument that the bears have been using that the only thing that has been creating better economic numbers has been inventory restocking and once the restocking is done the feeling is that it was a temporary blip," said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.

"So once you start to get some negative numbers, especially around the consumer, it lends to the argument that GDP growth is not really there and it is going to go back to zero."

The Dow Jones industrial average (.DJI) was down 48.17 points, or 0.38 percent, at 12,605.55. The Standard & Poor's 500 Index (.SPX) was off 2.76 points, or 0.21 percent, at 1,310.25. The Nasdaq Composite Index (.IXIC) took off 5.09 points, or 0.18 percent, at 2,806.85.

Earnings reports continue to paint a muddled picture. Exxon Mobil Corp (XOM.N) fell 2.1 percent to $83.71 and was the biggest drag on both the Dow and S&P 500. The U.S. energy major's profit narrowly beat expectations as rising oil prices offset falling margins for chemicals and fuel, and production fell short of some estimates.

Pharmaceutical wholesaler McKesson Corp (MCK.N) gained nearly 4 percent to $81.74 after it reported higher-than-expected quarterly earnings, fueled by growth in its core drug distribution business.

According to Thomson Reuters data, of the 204 companies in the S&P 500 that have reported results so far, 59.8 percent topped estimates, tracking below the beat rate at this stage of the earnings season in recent quarters.

Shortly after the opening bell, the S&P 500 triggered a bullish technical signal, known as a "golden cross," as its 50-day average ticked above its 200-day average. The signal indicates a shift in mid-term momentum and usually means gains in the index six months down the road.

The S&P is on pace for a 4 percent gain in January, its best month since October. The Dow is up 3 percent, on track for its fourth straight monthly gain, while the Nasdaq is up 7.6 percent.

Drugmaker heavyweights Pfizer Inc (PFE.N) and Eli Lilly & Co (LLY.N) both topped expectations. But Pfizer trimmed its 2012 view and Lilly repeated an outlook calling for a drop in 2012 earnings.

Lilly edged up 1.3 percent $39.75 and Pfizer dipped 1.3 percent to $21.30.

Transportation stocks dipped as United Parcel Service Inc (UPS.N) gave up early gains to fall 1 percent to $75.42. The package delivery and logistics group posted a stronger-than-expected quarterly profit, but analysts cited profit-taking and company comments on "euro headwinds in the first quarter.

The Dow Jones Transportation index (.DJT) shed 0.3 percent.

Housing stocks fell after the S&P/Case-Shiller report on U.S. home prices. The PHLX housing index (.HGX) dropped 1.5 percent and the Dow Jones U.S. home construction index (.DJUSHB) declined 1.7 percent. Lennar Corp (LEN.N) lost 2.3 percent to $21.63.

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)

NEW YORK (Reuters) – Stocks edged lower on Monday on stalled Greek debt talks, but an afternoon rally cut losses in a sign of the underlying resilience the market has shown early in the year.

Major indexes had fallen more than 1 percent as negotiations between the Greek government and private bondholders over the restructuring of 200 billion euros of debt failed to reach an agreement before the start of a summit of European leaders.

But by the afternoon those losses were cut sharply. Optimism that the U.S. markets can shrug off Europe's troubles has fueled gains in 2012, with the S&P 500 up 4.7 percent this month. Money managers, some of whom missed the upward move, appear willing to buy on intraday declines.

"The action that we've seen today is very similar to what we've seen throughout most of the year so far," said Ryan Larson, head of equity trading at RBC Global Asset Management in Chicago. "We see the resilience showing in U.S. markets and I think that's a theme that we've seen throughout 2012."

"The U.S. appears to be slowly, slowly in the early stages of a decoupling from the euro zone," he said.

Financial shares were hurt the most by developments in Europe. The sector (.GSPF) lost 1 percent, the biggest drag on the S&P 500. Bank of America (BAC.N) fell 3 percent to $7.06.

Material, technology and telecoms stocks led the turnaround after the close of European markets. The S&P 500 materials sector (.GSPM), which is up over 11 percent already this year, finished barely lower on Monday.

But volume was low at just 6.2 billion shares on the NYSE, Amex, and Nasdaq. That indicated participation was light and likely amplified market movements. The 200-day moving average for volume at those venues is 7.8 billion.

Peter Lee, chief technical strategist at UBS Wealth Management, said many of his clients, who include some big institutional investors, are still cautious after the S&P 500 has climbed over 22 percent from lows in October.

"Some buyers are supporting this market, and we think it may be short-covering," he said. "It gives the market the illusion it is strong."

The Dow Jones industrial average (.DJI) dropped 6.74 points, or 0.05 percent, to 12,653.72. The Standard & Poor's 500 Index (.SPX) lost 3.31 points, or 0.25 percent, to 1,313.02. The Nasdaq Composite Index (.IXIC) fell 4.61 points, or 0.16 percent, to 2,811.94.

European stock markets were down over 1 percent. The FTSEurofirst 300 (.FTEU3), a measure of Europe's biggest companies, fell 1 percent.

Even though the euro zone crisis drags on, the S&P 500 was on track for its best month since October, helped by stronger U.S. economic data and a easing of conditions in Europe's financial system following backing from global central banks.

Technical analysts will take comfort from the fact that the S&P 500 held above the psychologically important 1,300 level after crossing it for the first time in six months earlier in January. The bounce off the level on Monday was to a tee.

Germany sought to tone down reports it was pushing for Greece to give up control over its budget policy to European institutions. Greece was unlikely to accept that scenario, presenting yet another obstacle to a second bailout package for Athens.

Apple (AAPL.O) shares helped cap losses on the Nasdaq after Morgan Stanley said the iPhone maker could add China Telecom (0728.HK) and China Mobile (0941.HK) as distributors over the next year. Apple rose 1.3 percent to $453.01.

Swiss engineering group ABB (ABBN.VX) agreed to buy U.S. electrical components maker Thomas & Betts Corp (TNB.N) for $3.9 billion in cash, sending shares of the company up 23.1 percent to $71.31.

Consumer spending, the main pillar of the U.S. economy, was flat in December as households added to savings after the largest rise in income in nine months. Although the data pointed to a slow start for spending in 2012, economists were cautiously optimistic that an improving labor market will support demand.

Chris Cordaro, chief investment officer at RegentAtlantic Capital, a wealth management firm in Morristown, New Jersey, believes equities will finish sharply higher this year as Europe's problems are resolved and investors buy into stock valuations that were beaten down through much of last year.

"We could definitely end the year much higher on equities," he said. "We have been favoring equities in our portfolio. We have just increased our exposure to emerging markets."

(Editing by Kenneth Barry)

NEW YORK – Greece and the investors who bought its bonds have the beginnings of a deal that could avert a disastrous, long-feared Greek default on its debt. But don’t expect a celebration on Wall Street this week.

If the deal holds and works, it will help prevent a potential shock to the world banking system. It will also remove one of the biggest threats to the impressive rally in U.S. stocks this year.

The problem for investors is that good news — like real improvement in Greece’s long-term finances — is likely to develop in slow motion. Bad news, like a breakdown in the debt talks or a spasm of market fear, would be faster. Punch-in-the-nose fast.

“I think they’ll probably be happy, but I don’t really see this accomplishing very much in the long term,” says Michael E. Lewitt, editor of The Credit Strategist, an investor newsletter.

“They’re not solving any of these problems,” he says, so if things go wrong, “it’s likely to be a much worse sell-off.”

Under the tentative agreement, announced Saturday, investors holding euro206 billion in Greek bonds, or about $272 billion, would exchange them for bonds with half the face value. The replacement bonds would have a longer maturity and pay a lower interest rate.

The deal would reduce Greece’s annual interest expense from about euro10 billion to about euro4 billion. When the bonds mature, Greece would have to pay its bondholders only euro103 billion.

It is unclear how investors who buy and sell the bonds of other debt-burdened countries, such as Italy, Spain and Portugal, will react. If they drive up borrowing costs for those countries, the debt crisis could get worse.

Private investors hold two-thirds of Greece’s debt, which is equal to an unsustainable 160 percent of its annual economic output. By restructuring the debt, Greece hopes to make it a more manageable 120 percent by decade’s end.

Greece’s public creditors — the International Monetary Fund, the European Union and the European Central Bank — want the government to cut public salaries further to bring the national budget in line.

That proposal has been met with resistance by Greek politicians afraid of losing elections this spring. But they also worry Greece will be denied euro130 billion in bailout money if it can’t cut its deficit.

The restructuring of Greece’s private debt could still fall apart. If it does, that could mean trouble in the U.S. markets, which have enjoyed a placid January of steady gains.

The Dow Jones industrial average is up 3.6 percent in the young year. The Standard & Poor’s 500 index has gained 4.7 percent, roughly half its average gainfor a full year.

If the Greek talks break down, “the stock market could probably lose half its gains for the year,” Jeffrey Kleintop, chief market strategist at LPL Financial, said last week, before Greece and the private investors reached their tentative deal.

On paper, it’s hard to see how Greece could take down financial markets in the U.S., the world’s biggest economy, with $15.2 trillion in goods and services churned out every year.

Greece’s annual economic output is euro220 billion. That translates to $285 billion, on par with the economy of Maryland. The U.S. sells $1.6 billion in weapons, medicine and other products to Greece each year, a minuscule 0.07 percent of exports.

U.S. banks say Greece on its own poses no danger to them. Unlike European banks, they’re not major lenders to Greek businesses and aren’t saddled with Greek government debt.

In its most recent report, JPMorgan Chase, the largest bank in the U.S., said it had just $4.5 billion at risk in Greece, Ireland and Portugal combined. That’s about what the bank makes in revenue in two and a half weeks.

Some investors worry that U.S. banks would struggle to cover the $68 billion in insurance contracts they sold on Greece’s government debt.

That’s hardly enough to pull down the banking system. And the banks have offset all but $3.2 billion of those contracts with other contracts. In other words, pocket change.

“The direct impact of a Greek default is almost zero,” Jamie Dimon, CEO of JPMorgan Chase, told CNBC on Thursday.

So what’s everybody — well, everybody but Jamie Dimon — worried about?

A breakdown in talks could trigger steep losses in stock markets in Europe and the U.S. It could cause borrowing rates for Portugal and Italy to jump, pushing those much larger countries closer to defaults of their own.

A Greek default could unleash a host of larger problems. While some are already anticipated, others are likely to blindside even the closest observers, says Nick Colas, chief market strategist at ConvergEx Group.

“In any complex system, you’re going to have unintended consequences,” he says.

He compares it to the collapse of Lehman Brothers investment house in September 2008: Some analysts saw it coming, but the fallout still caught them by surprise. For a time, even super-safe money market funds were suspect.

At a conference on sovereign debt this week in New York, Steve Hanke, professor of economics at Johns Hopkins University, predicted that even commodity prices would plunge in response to a messy Greek default.

Traders seeking safety would immediately sell euros and buy dollars, Hanke said. The dollar would soar and prices for commodities like oil and wheat would collapse. A single dollar would buy much more oil or wheat.

“If the bomb is set off by Greece, commodity prices will collapse,” Hanke said.

Hanke, who has advised governments around the world on managing their currencies, argued that Greece appears bound to collapse under its debts as its economy shrinks. “Greece is doomed,” he said.

Hans Humes, president of Greylock Capital Management, warns that if banks and investment funds that hold Greek bonds take steep losses, then Portugal, Italy and other countries shouldering heavy debt burdens can be expected to follow Greece’s lead.

It’s comparable to a messy default. Traders will respond by immediately selling government bonds from those countries, Humes said. Borrowing costs will rise, and Europe’s debt crisis will turn much worse.

Humes has been involved in the negotiations on the side of creditors holding Greek bonds, so he has a stake in the game. But it’s a scenario other money managers often cite.

“There’s a fear that other countries won’t negotiate at all. They’ll just say, `We’ll pay you back at 50 percent or maybe less,” Kleintop says.

To Colas, the deepest concern isn’t how the S&P 500 reacts or whether the dollar rises if Greece drops the European currency. It’s the possibility for panic, especially a run on European banks, some of the largest buyers of government debt.

“Human emotions can drive things off the rails,” Colas says.

___

Freed reported from Minneapolis.

NEW YORK (Reuters) – Stocks trimmed losses to end little changed on Friday, as investors saw dips in the market as an opportunity to buy into what has been a strong first month of 2012.

The Dow posted its first weekly loss this year, hurt Friday as Chevron Corp (CVX.N) announced earnings that were below Wall Street's estimates and Procter & Gamble Co (PG.N) cut its full-year profit forecast because of the strong dollar.

But the emergence of late-day buyers was viewed positively as major averages have methodically climbed through January. This week's news that the Federal Reserve intends to keep interest rates low through late 2014 added a jolt of demand that could extend the rally.

"Investors are almost welcoming these little dips, jumping in when they can to join this rally. At this point, they are rationalizing anything they can to get in," said James Dailey at TEAM Financial Management LLC in Harrisburg, Pennsylvania.

"Cautious bulls are no longer cautious after the Fed announcement this week."

Chevron, the No. 2 U.S. oil company, fell 2.5 percent to $103.96 and was the biggest drag on the Dow.

The Commerce Department said U.S. gross domestic product expanded at its fastest pace in 1-1/2 years in the last quarter of 2011, but the 2.8 percent rise fell short of expectations.

Inventory building accounted for much of the growth, and weak spending by businesses in the GDP report pointed to a slower pace of recovery early this year, denting recent optimism about the economy.

In company news, Facebook plans to file documents as early as Wednesday for a highly anticipated initial public offering that will value the world's largest social network at between $75 billion and $100 billion, according to the Wall Street Journal, which cited unidentified sources.

The Dow Jones industrial average (.DJI) was down 74.17 points, or 0.58 percent, at 12,660.46. The Standard & Poor's 500 Index (.SPX) was down 2.11 points, or 0.16 percent, at 1,316.32. The Nasdaq Composite Index (.IXIC) was up 11.27 points, or 0.40 percent, at 2,816.55.

For the week, the Dow fell 0.5 percent, the S&P was up 0.1 percent and the Nasdaq rose 1.1 percent.

Friday's losses were limited as U.S. Federal Reserve statements this week and economic data kept investors alert for the possibility of another round of monetary stimulus known as quantitative easing, or QE3.

"Out of what the Fed said, you can expect some negative numbers because the Fed obviously saw what the GDP numbers are and they anticipate a slowdown," said Sean Kraus, chief investment officer at CitizensTrust in Pasadena, California.

If the Fed does resort to QE3 to stimulate growth, investors "don't want to be caught flat-footed and be out of risky assets," Kraus said.

Consumer product company Procter & Gamble dipped 0.8 percent to $64.30.

Ford Motor Co (F.N) shares fell 4.2 percent to $12.21 after the carmaker reported a lower-than-expected fourth-quarter profit on higher commodity costs and losses in Europe and Asia.

Network equipment makers Juniper Networks Inc (JNPR.N) and Riverbed Technologies Inc (RVBD.O) gave first-quarter outlooks after the close Thursday that were below expectations. Juniper fell 3 percent to $21.69 while Riverbed slid 18.3 percent to $24.45.

According to Thomson Reuters data, 59 percent of 184 S&P 500 companies reporting earnings through Friday have topped analysts' estimates, below the beat rate of about 70 percent seen at this stage of earnings season in recent quarters.

Utilities were the worst performing among S&P sectors after results from American Electric Power Co Inc (AEP.N) and Dominion Resources (D.N). American Electric was off 3.2 percent to $39.95, while Dominion fell 2.5 percent to $49.56. The S&P utilities index (.GSPU) fell 1.3 percent.

Eastman Chemical Co (EMN.N) offered to buy specialty chemical maker Solutia Inc (SOA.N) for about $3.38 billion in cash and stock to extend its reach in emerging markets, particularly the Asia-Pacific region. Solutia shares jumped about 41.1 percent to $27.52 and Eastman shares gained 7 percent to $50.41.

Negotiations between Greece and its private creditors on a debt swap deal made progress on Friday and will continue over the weekend, a senior Greek government official said. Renewed concern about the crisis has troubled markets this week.

About 6.6 billion shares exchanged hands on the New York Stock Exchange, NYSE Amex and Nasdaq on Tuesday.

(Reporting By Angela Moon; Editing by Kenneth Barry)

NEW YORK (Reuters) – January has turned out strong for equities with just two trading days to go. If you're afraid to miss the ride, there's still time to jump in. You just might want to wear a neck brace.

The new year lured buyers into growth-related sectors, the ones that were more beaten down last year. The economy is getting better, but not dramatically. Earnings are beating expectations, but at a lower rate than in recent quarters. Nothing too bad is coming out of Europe's debt crisis – and nothing good, either – at least not yet.

"No one item is a major positive, but collectively, it's been enough to tilt it towards net buying," said John Schlitz, chief market technician at Instinet in New York.

Still, relatively weak volume and a six-month high hit this week make some doubt that the gains are sustainable.

But then there's the golden cross.

Many market skeptics take notice when this technical indicator, a holy grail of sorts for many technicians, shows up on the horizon.

As early as Monday, the rising 50-day moving average of the S&P 500 could tick above its rising 200-day moving average. This occurrence – known as a golden cross – means the medium-term momentum is increasingly bullish. You have a good chance of making money in the next six months if you put it to work in large-cap stocks.

In the last 50 years, according to data compiled by Birinyi Associates, a golden cross on the S&P 500 has

augured further gains six months ahead in eight out of 10 times. The average gain has been 6.6 percent.

That means the benchmark is on solid footing to not only hold onto the 14 percent advance over the last nine weeks, but to flirt with 1,400, a level it hasn't hit since mid-2008.

The gains, as expected, would not be in a straight line. But any weakness could be used by long-term investors as buying opportunities.

"The cross is an intermediate bullish event," Schlitz said. "You have to interpret it as constructive, but I caution people to take a bullish stance, if they have a short-term horizon ."

GREECE, U.S. PAYROLLS AND MOMENTUM

Less than halfway into the earnings season and with Greek debt talks over the weekend, payrolls data next week and the S&P 500 near its highest since July, there's plenty of room for something to go wrong. If that happens, the market could easily give back some of its recent advance.

But the benchmark's recent rally and momentum shift allow for a pullback before the technical picture deteriorates.

"We bounced off 1,325, which is resistance. We're testing 1,310, which should be support. We are stuck in that range," said Ken Polcari, managing director at ICAP Equities in New York.

"If over the weekend, Greece comes out with another big nothing, then you will see further weakness next week," he said. "A 1 (percent) or 2 percent pullback isn't out of the question or out of line."

On Friday, the S&P 500 (.INX) and the Nasdaq Composite (.IXIC) closed their fourth consecutive week of gains, while the Dow Jones industrial average (.DJI) dipped and capped three weeks of gains. For the day, the Dow dropped 74.17 points, or 0.58 percent, to close at 12,660.46. The S&P 500 fell 2.10 points, or 0.16 percent, to 1,316.33. But the Nasdaq gained 11.27 points, or 0.40 percent, to end at 2,816.55.

For the week, the Dow slipped 0.47 percent, while the S&P 500 inched up 0.07 percent and the Nasdaq jumped 1.07 percent.

A DATA-PACKED EARNINGS WEEK

Next week is filled with heavy-hitting data on the housing, manufacturing and employment sectors.

Personal income and consumption on Monday will be followed by the S&P/Case-Shiller home prices index, consumer confidence and the Chicago PMI – all on Tuesday.

Wednesday will bring the Institute for Supply Management index on U.S. manufacturing and the first of three key readings on the labor market – namely, the ADP private-sector employment report. Jobless claims on Thursday will give way on Friday to the U.S. government's non-farm payrolls report. The forecast calls for a net gain of 150,000 jobs in January, according to economists polled by Reuters.

Another hectic earnings week will kick into gear with almost a fifth of the S&P 500 components posting quarterly results. Exxon Mobil (XOM.N), Amazon (AMZN.O), UPS (UPS.N), Pfizer (PFE.N), Kellogg (K.N) and MasterCard (MA.N) are among the names most likely to grab the headlines.

With almost 200 companies' reports in so far, about 59 percent have beaten earnings expectations – down from about 70 percent in recent quarters.

(Reporting by Rodrigo Campos; Additional reporting by Chuck Mikolajczak and Caroline Valetkevitch; Editing by Jan Paschal)

NEW YORK (Reuters) – Stocks slipped on Friday as data showed the U.S. economy grew less than expected in the fourth quarter, while some disappointing earnings added pressure to the market.

Government data showed U.S. gross domestic product expanded at its fastest pace in 1-1/2 years in the fourth quarter of 2011 but fell shy of expectations. A strong rebuilding of inventories and weak spending by businesses pointed to slower growth early this year, denting recent optimism about an improving economy.

But losses were curbed as Federal Reserve statements this week and economic data kept investors alert for the possibility of another round of monetary stimulus known as quantitative easing, or QE3.

"Out of what the Fed said, you can expect some negative numbers because the Fed obviously saw what the GDP numbers are and they anticipate a slowdown," said Sean Kraus, chief investment officer at CitizensTrust in Pasadena, California.

If the Fed does resort to QE3 to stimulate growth, investors "don't want to be caught flat-footed and be out of risky assets," Kraus said.

Chevron Corp (CVX.N) fell 3.1 percent to $103.26 and was the biggest drag on the Dow after the No. 2 U.S. oil company posted lower earnings, missing Wall Street forecasts. The NYSEArca oil index (.XOI) lost 0.7 percent.

The Dow Jones industrial average (.DJI) dropped 60.06 points, or 0.47 percent, to 12,674.57. The Standard & Poor's 500 Index (.SPX) dipped 2.69 points, or 0.20 percent, to 1,315.74. The Nasdaq Composite Index (.IXIC) gained 7.46 points, or 0.27 percent, to 2,812.74.

Procter & Gamble Co (PG.N) dipped 0.7 percent to $64.35 after said this year's profit would come in lower than previously expected due to the strong dollar.

Ford Motor Co (F.N) shares fell 1.7 percent to $12.52 after the carmaker reported a lower-than-expected fourth-quarter profit on higher commodity costs and losses in Europe and Asia.

Network equipment makers Juniper Networks Inc (JNPR.N) and Riverbed Technologies Inc (RVBD.O) gave first-quarter outlooks after the close Thursday that were below expectations. Juniper fell 3.9 percent to $21.50 while Riverbed plunged 22.4 percent to $23.22.

According to Thomson Reuters data, 58.7 percent of 184 S&P 500 companies reporting earnings through Friday have topped analysts' estimates, below the beat rate of about 70 percent seen at this stage of earnings season in recent quarters.

Utilities moved lower after results from American Electric Power (AEP.N), off 2.9 percent to $40.07, and Dominion Resources (D.N), down 0.8 percent to $50.44. The S&P utilities index (.GSPU) fell 1.1 percent.

Eastman Chemical Co (EMN.N) offered to buy specialty chemical maker Solutia Inc (SOA.N) for about $3.38 billion in cash and stock to extend its reach in emerging markets, particularly the Asia-Pacific region. Solutia shares rose 41 percent to $27.59.

Euro zone finance officials voiced optimism a deal to avert a disorderly Greek default was imminent. Renewed concern about the crisis has troubled markets this week.

(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry)