Stocks lose steam, finish little changed

NEW YORK -- Stocks reversed course late Friday, finishing slightly lower as early gains built on better earnings reports from retailers faded away.

Trading was choppy, and the market's swings were exaggerated by light volume ahead of the Memorial Day weekend.

Stocks drifted lower for much of the week. With few economic reports coming out, the market was left with little fuel to sustain a two and a half-month surge that has lifted stocks up more than 30% from 12-year lows in early March.

Next week's economic calendar is much more heavily loaded, with key reports coming on home sales, big-ticket manufactured goods and consumer confidence.

Whether those data please or disappoint the market could be the key to determining what becomes of the spring rally, which many investors believe was overdone.

"Everything is overpriced," said Harry Rady, chief executive and portfolio manager of Rady Asset Management. "A very long, protracted recession is still very much alive."

The Dow Jones industrial average fell 14.81, or 0.2%, to 8,277.32. The S&P 500 index slipped 1.33, or 0.2%, to 887.00, and the Nasdaq composite index lost 3.24, or 0.2%, to 1,692.01.

Despite the market's seesaw movements this week, all the major indicators finished the five-day period in the black. The Dow rose 0.10%; the S&P 500 index rose 0.47%; and the Nasdaq rose 0.71%.

The market also was jolted by a warning Thursday from Standard & Poor's that it could downgrade the British government's AAA debt rating, which would increase its borrowing costs. That got some thinking that the United States' own top-shelf rating might also be in jeopardy.

Worries about the U.S. government's credit ratings eased somewhat on Friday, but Treasurys and the dollar both lost ground, with the dollar falling to its weakest level against the euro since January.