By Kate Gibson, MarketWatch
NEW YORK — U.S. stocks on Friday finished with weekly losses after a rating agency warning on Europe pulled the plug on what began as an upbeat session on a confidence vote in Italy.
“We had a big move to the upside this morning after Italy’s prime minister won a vote of confidence. It paves the way for a budget package to be passed,” said Michael Gibbs, managing director and director of equity strategy at Morgan Keegan.
“The mid-day Fitch comes out and implies they are going to downgrade six sovereign-debt ratings, and now we’re struggling to hold above the flat line,” he added.
After a 99-point rise, the Dow Jones industrial average declined 2.42 points, or less than 0.1 percent, to 11,866.39, with a weekly drop of 2.6 percent.
Down 2.8 percent on the week, the S&P 500 rose 3.89 points, or 0.3 percent Friday, to 1,219.65.
The Nasdaq composite added 14.32 points, or 0.6 percent, to 2,555.33, leaving it down 3.5 percent from the week-ago close.
Making a disappointing debut on the Nasdaq, shares of Zynga Inc. fell 5 percent to $9.50 each after the online-game maker priced an initial public offering at $10 a share.
Fitch Ratings affirmed France’s top Triple-A credit rating, but warned of a potential down grade for six other euro-using nations, placing Belgium, Spain, Slovenia, Italy, Ireland and Cyprus under review, calling a broad solution to Europe’s debt crisis “technically and politically beyond reach.”
A report showed the cost of living held flat in November, reassuring investors and bolstering the Federal Reserve’s take that inflation isn’t an issue for the economy.
U.S. consumer prices held flat last month as gas costs fell, while core prices, which don’t take food and energy into account, climbed 0.2 percent.
“Consumers should be enjoying some price relief from falling gasoline prices but face higher food prices. This is good news, as it appears that recent inflation pressure is subsiding,” Fred Dickson, chief investment strategist at Davidson Cos., wrote in emailed commentary.
On Thursday, U.S. equities rose, halting a three-day losing streak, after data had jobless claims sliding to a more-than-three-year low last week and manufacturing picking up in parts of the country in December.