NEW YORK -- U.S. stocks stabilized Friday and ended with a small gain, but it wasn’t enough to prevent the market’s biggest weekly drop since April.
Investors became more cautious this week as corporate earnings for the April-June period began trickling in. Worrisome news about a Portuguese bank also revived fears of another European debt crisis. That weighed on stocks, which had closed out the previous week at record highs.
Investors are now mulling whether the stock’s market valuations are justified by the outlook for company earnings, or whether they have risen too far, too fast.
As investors try to make sense of the market, "we could be in a holding pattern," said Kristina Hooper, US Investment Strategist at Allianz Global Investors.
The Standard & Poor’s 500 rose 2.89 points, or 0.2 percent, to 1,967.57 on Friday. The weekly decline of 0.9 percent was the biggest since April 11.
The Dow Jones industrial average climbed 28.74 points, or 0.2 percent, to 16,943.81. The Nasdaq composite rose 19.29 points, or 0.4 percent, to 4,415.49.
On Friday, investors absorbed corporate news and earnings.
Lorillard, whose cigarette brands include Newport, Old Gold and Kent, rose $2.92, or 4.6 percent, to $66.01. Lorillard and rival Reynolds American confirmed they are in talks to combine -- a deal that would create a formidable rival to Altria Group Inc., owner of Philip Morris USA.
Investors also pored over company earnings.
Fastenal, a maker of industrial fasteners, fell the most in the S&P 500. Its stock dropped $2.01, or 4.2 percent, to $46.15 after reporting sales that missed analysts’ expectations.
As U.S. companies start to report second-quarter results, investors expect more growth in profits. Earnings for S&P 500 companies are forecast to climb by 6.4 percent. That rise is bigger than the 3.4 percent increase in the first quarter and 4.9 percent in the same period a year earlier, according to data from S&P Capital IQ.