U.S. stocks recovered Friday from a rough start and turned higher, attempting to put a cap on one of the strongest weeks of 2012.
The Dow Jones industrial average rose 12 points or 0.1%, the S&P 500 edged up 1 point or 0.7% and the Nasdaq was up by 9 points or 0.3%. Heading into Friday trading, the Dow Jones industrial average was up 2.9%, on track for its best week of the year. The S&P 500 index was up 2.8%, also headed for its strongest 2012 week. The Nasdaq composite was 3% higher, which would be the best week since January.
Investors shook off early disappointment that Federal Reserve Chairman Ben Bernanke did not signal that more stimulus is on the horizon.
Overseas markets were still selling off, partly in reaction to testimony from Bernanke to a congressional panel Thursday. He said the U.S. central bank stands ready to act, but gave no indication that additional asset purchases are imminent.
Marc Chandler, strategist for Brown Brothers Harriman, said the investors had "unreasonable expectations" that Bernanke would respond to last week's disappointing payrolls report by promising more stimulus to the economy.
"People were hoping that they were going to get something clear from Bernanke, and they didn't," he said. "The takeaway [shows] just how fragile sentiment is."
The comments took the air out of an earlier rally sparked by a surprise rate cut by the People's Bank of China.
European stocks were lower in afternoon trading. Britain's FTSE 100 was down 0.4% and the DAX in Germany fell 0.3%. France's CAC 40 declined 0.8%.
Asian markets, which had all closed Thursday ahead of both the Chinese rate cut and Bernanke comments, ended Friday trading lower. The Shanghai Composite closed down 0.5%, the Hang Seng in Hong Kong lost 0.9%, and Japan's Nikkei fell 2.1%
Art Hogan, managing director at Lazard Capital Markets, said that investors should not have been surprised that Bernanke didn't signal more stimulus in his testimony. But he said hopes had been raised by comments from other Fed officials, including Vice Chairman Janet Yellen, prior to his comments.
Worries about Europe eased slightly Thursday after Spain held a successful bond auction. But Spain's problems are far from solved, however. Ratings agency Fitch moved Thursday to downgrade the country's credit rating to "BBB" from "A." and warned the country's debt is at risk of another cut into junk bond status.
Spain needs to recapitalize its banking sector, but its treasury minister said earlier this week it will need help from Europe to do so because the country was at risk of being shut out of the financial markets.
U.S. stocks ended mixed Thursday, trimming gains from earlier in the day. Investor sentiment remains in the "extreme fear" range on CNNMoney's Fear & Greed index, although they were not quite as fearful as they were a day or week earlier.
Economy: The U.S. trade deficit for April came in at $50.1 billion, roughly in line with forecasts of analysts by Briefing.com, and down from the revised $52.6 billion in March.
Wholesale inventories for April rose by 0.6%, after increasing by 0.3% in the month prior.
Companies: Shares of International Game Technology edged up 0.7%. The gaming firm announced late Thursday that it had received a recommendation for an online gaming license from the Nevada Gaming Control Board.
Shares of Molina Healthcare jumped 22% after the company announced late Thursday that Ohio had endorsed its bid to continue as a health care provider for the state's Medicaid beneficiaries.
Currencies and commodities: The dollar gained against the euro and the British pound, but slipped versus the Japanese yen.
Oil for July delivery continue its slide, losing $1.60 to $83.22 a barrel.
Gold futures for June delivery rose $1.50 to $1,589.50 an ounce, reversing earlier losses.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield near down to 1.57% from the 1.65% level reached late Thursday.