NEW YORK (CNNMoney) -- U.S. stocks ended a stellar week with a whimper on Friday, erasing the morning's big job-related gains as concerns about Europe's debt crisis took over in the afternoon.
The Dow Jones industrial average (INDU) and the S&P 500 (SPX) each lost a fraction of a point, while the Nasdaq (COMP) rose less than 1 point. Earlier, all three major indexes had been up more than 1%.
Despite Friday's ho-hum finish, stocks logged robust gains for the week. The Dow rallied 7%, its biggest weekly gain since July 2009, while the S&P 500 climbed 7.4%, its best weekly performance since March 2009. The Nasdaq rose 7.6%, delivering its second-best weekly rise this year.
Bank stocks were among the top gainers Friday, with Bank of America (BAC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) posting the biggest increases on the Dow. Morgan Stanley (MS, Fortune 500), Goldman Sachs (GS, Fortune 500) and Citigroup (C, Fortune 500) shares also finished sharply higher.
The mood on Wall Street was positive after the U.S. government said employers boosted payrolls by 120,000 jobs in November, while the unemployment rate eased to 8.6% -- its lowest level since March 2009.
The drop in the unemployment rate was the "big surprise," said Timothy Ghriskey, chief investment officer at Solaris Asset Management.
Investors know that figure is skewed by the number of people giving up on their job search and dropping out of the workforce, but they were still satisfied with the pickup in hiring, he said.
That early euphoria ebbed as mixed news out of Europe kept investors on edge.
In a speech to the German parliament Friday, German Chancellor Angela Merkel reaffirmed her support for a fiscal union.
"[Merkel] is pushing forward for more integration for the eurozone, which would safeguard the region and hold back on the worse case scenario of the eurozone breaking up," said Manoj Ladwa, a senior trader at ETX Capital.
The euro initially gained ground and eurozone bond yields eased on the news, but later reversed course amid several troubling rumors.
Talk of a downgrade on Spain's credit rating spooked investors, pushing the Spanish 10-year yield near 5.7%. Earlier in the day, it had slipped below 5.5%.
Also, ongoing chatter about the European Central Bank possibly lending hundreds of billions of dollars to the International Monetary Fund to aid Europe's debt-laden countries led to reports that Republicans would try to block any such move. And that further worried investors.
Conservative lawmakers are against the IMF's involvement because it could leave U.S. taxpayers on the hook with a hefty bill.
Developments out of Europe will be the main driver for the stock market's moves as the year comes to a close, said Ghriskey. If European officials can remain on the path toward a solution, stocks will likely end 2011 with modest gains. But roadblocks along the way will pressure the markets.
Two days into December, the Dow is up almost 4% this year to date, while the S&P and Nasdaq are in the red by a handful of points.
U.S. stocks ended mixed Thursday, after a big rally on Wednesday, as investors were reluctant to push prices higher amid ongoing worries about Europe.
World markets: European stocks closed higher. Britain's FTSE 100 (UKX) jumped 0.9%, the DAX (DAX) in Germany rose 0.6% and France's CAC 40 (CAC40) gained 0.8%.
Asian markets ended mixed. The Shanghai Composite (SHCOMP) slid 1.1%, while the Hang Seng (HSI) in Hong Kong edged up 0.2% and Japan's Nikkei (N225) rose 0.5%.
Companies: Western Digital's (WDC, Fortune 500) stock jumped 7% after the company raised its revenue guidance for the fourth quarter. The company had restarted production at its flood-damaged facilities in Thailand ahead of schedule.
Shares of Research in Motion (RIM) slid nearly 10% after the company said it no longer expects to meet its full-year earnings target.
Shares of Big Lots (BIG, Fortune 500) fell more than 8% after the retailer posted a sharp decline in third-quarter profit.
Currencies and commodities: The dollar rose against the euro, the British pound, and the Japanese yen.
Oil for January delivery ticked up 76 cents to settle at $100.96 a barrel.
Gold futures for February delivery gained $11.70 to settle at $1,747 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.04% from 2.12% late Thursday.
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