Stocks make up for early declines

Stocks finished about where they started Friday as investors balanced positive signs for the U.S. economy with a looming deadline for a deficit-cutting committee in Congress. Steep declines earlier in the week left the market with its worst weekly loss since September.

The Dow Jones industrial average gained 25.43 points, or 0.2 percent, to close at 11,796.16. The Dow traded in a relatively narrow range, rising as many as 84 points and falling as many as 15. Hewlett-Packard Co. jumped 2.6 percent, the most of the 30 stocks in the index.

The Conference Board’s index of leading economic indicators rose more than Wall Street analysts were expecting, a sign that the economy may pick up in the coming months. But many investors were cautious as a key congressional committee remained deadlocked on ways to cut the U.S. budget deficit.

A bipartisan panel must agree on making at least $1.2 trillion in deficit cuts by Thanksgiving. If the committee fails and Congress takes no other action, automatic spending cuts will take effect beginning in 2013. Economists worry that a deadlocked Congress will erode business confidence and slow the already-fragile economy.

The Standard and Poor’s 500 lost 0.48 point, or less than 0.1 percent, to 1,215.65.

Telecommunications and technology stocks fell broadly. The Nasdaq composite slid 15.49, or 0.6 percent, to 2,572.50.

Encouraging economic reports this week – including a drop in unemployment applications and an increase in industrial production – did little to help the market because a European meltdown would easily drag down the U.S. economy, said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group.

“Our economy might be improving, but the fixation is on what’s going to happen with the world banking system if defaults happen in Europe,” she said. She said investors are reluctant to take big positions because no one knows how Europe’s problems will be resolved, or how U.S. companies’ future profits will be affected.