NEW YORK - Stocks rose, dropped and then recovered Friday - just as they did over the course of the first quarter, as Wall Street showed nervousness about rising inflation and dollar weakness but took solace in resilient consumer spending and slow economic growth.
The Dow Jones industrials finished the day 5 points higher, and ended the quarter down 108 points, or 0.87 percent, the index's feeblest performance since the second quarter of 2005.
Stocks initially climbed Friday on higher consumer spending and growth in Chicago-area manufacturing, but then plunged after the Bush administration detailed economic sanctions against China to protect U.S. paper producers from Chinese government subsidies. The news caused the dollar to weaken, raising concerns about the U.S. currency's status as an investment vehicle - one factor behind the market's dive in late February.
The Commerce Department's report that core inflation rose in February at the fastest pace since August caused additional wariness. But investors, shoring up their portfolios and picking up bargain stocks, pulled the market up from its lows of the day.
"It's been kind of a rough quarter. There have been some shocks out there. And the retail investor has been taking it in stride," said Scott Merritt, U.S. equity strategist at JPMorgan Asset Management.
The Dow rose 5.60 points, or 0.05 percent, to 12,354.35, after rising 67 points and falling 106 earlier in the session. The index is more than 300 points above its levels in early March.
Broader stock indicators were mixed. The Standard & Poor's 500 index lost 1.67, or 0.12 percent, to 1,420.86, and the technology-dominated Nasdaq composite index rose 3.76, or 0.16 percent, to 2,421.64.
The S&P 500 finished the quarter up 0.18 percent and the Nasdaq finished up 0.26 percent - their most meager quarterly performances since the second quarter of 2006.
The dollar fell against other major currencies after news of the sanctions against China, notably the yen, which many investors borrow to buy higher-yielding dollar assets. If the dollar weakens too much, dollar assets will become less attractive.
Bonds slipped. The yield on the benchmark 10-year Treasury note rose to 4.65 percent from 4.64 percent late Thursday. Gold prices rose.
Crude oil prices retreated after surpassing a six-month high this week, heightening worries about fuel costs eating into discretionary spending. Crude slipped 16 cents to $65.87 a barrel on the New York Mercantile Exchange.
Energy prices aren't the only problem: the Commerce Department's inflation barometer excluding energy and food shot up in February, leaving core inflation rising by 2.4 percent over the past 12 months.
"It's stubbornly above the Fed's comfort zone," said Merritt, noting that investors hope the Federal Reserve will lower interest rates this year. "They're afraid that they're going to take their sweet time making rate cuts."
But investors took comfort in other data Friday, which overall painted a picture of cool economic growth.
A University of Michigan survey showed consumer confidence slipped in March from a month earlier, but the Commerce Department reported that personal spending rose in February by the largest amount in 11 months, a good sign that the economy will keep chugging along, especially since recent data has shown stability in the job market.
An index of Chicago manufacturing activity in March soared more than expected, indicating expansion after a contraction in February. Construction spending in January rose by a better-than-expected 0.3 percent, up from a decline in December as strong gains in nonresidential spending and local projects offset a steep drop in housing construction.
And the government's spring planting report showed farmers expect to plant 90.5 million acres of corn this spring, more than anticipated.
"Inflation is a worry, so the market is reacting in a tepid way to what I considered fairly good economic news," said Richard Hoyt, market strategist for KDV Wealth Management in Minneapolis.
Concern that the economy is slowing too quickly has been a big factor in the market's recent volatility. The major stock indexes started strong in January, with the Dow extending the record-setting advance that began in 2006 and hitting a peak of 12,786.62 on Feb. 20. But stocks then tumbled, with the Dow plummeting 416 points Feb. 27 as various worries - about the possibility of recession, a stock dive in China, troubled subprime lenders, and dollar weakness versus the yen - came to a head.
The Dow fell March 5 to 12,050.41, its lowest close of the quarter. During the trading session on March 14, it briefly dipped below 12,000. But investors managed to steer the indexes back toward January levels, thanks to reassuring economic data and calming words from the Fed.
Next month, investors will be looking at first-quarter earnings reports to see if the corporate growth is retreating slowly, as expected.
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange, where consolidated volume came to 2.81 billion shares, the same as on Thursday.
The Russell 2000 index of smaller companies rose 1.77, or 0.22 percent, at 800.71. It's up 1.66 percent for the quarter.
Overseas, Japan's Nikkei stock average rose 0.14 percent. Britain's FTSE 100 fell 0.26 percent, Germany's DAX index climbed 0.29 percent, and France's CAC-40 gained 0.05 percent. On the Net:
New York Stock Exchange: www.nyse.com
Nasdaq Stock Market: www.nasdaq.com