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Originally published Friday, September 12, 2008 at 12:00 AM

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Stocks close mixed after volatile session

Stocks finished another volatile session today narrowly mixed, as steep declines by some of Wall Street's marquee financial firms outweighed...

The Associated Press

NEW YORK — Stocks finished another volatile session today narrowly mixed, as steep declines by some of Wall Street's marquee financial firms outweighed gains in the energy, utilities and materials sectors.

The Dow Jones industrial average fell 11.72 to 11,421.99 after falling more than 150 points in the early going.

Microsoft, one of the 30 Dow stocks, added 28 cents to close at $27.62, and ended up 7.7 percent for the week. Boeing, also a Dow stock, gained 73 cents to $63.30 but was up just 0.7 percent for the week.

Broader stock indicators came well off their lows. The Standard & Poor's 500 index rose 2.65 to 1,251.70, and the Nasdaq composite index rose 3.05 to 2,261.27. The major indexes each rose more than 1 percent Thursday so some pullback likely wasn't a surprise to traders.

Investors are worried about the risky debt held by big financial companies, particularly Lehman Brothers. An unexpected slowdown in retail sales last month also weighed on the market.

But the troubles of the financial sector dominated the session as investors tried to glean insights into Lehman's race to sell itself or otherwise regain Wall Street's confidence. The company's shares have spiraled lower this week, heaping pressure on executives at the No. 4 U.S. investment bank to line up a buyer or source of fresh cash.

Lehman shares — which tumbled 42 percent Thursday and are down more than 94 percent for the year — fell 57 cents more today, or 13.5 percent, to close at $3.65.

Meanwhile, shares of Washington Mutual fluctuated following contradictory reports over whether JPMorgan Chase was in talks to acquire the Seattle-based bank. WaMu stock slipped 10 cents, or 3.7 percent, to close at $2.73.

"I think everyone talks about more shoes to drop and of course there have been a couple of those this week with Fannie and Freddie and Lehman. Hopefully it means we'll be getting closer to the end," said Russell Croft of Croft Value Fund, referring to government bailouts of mortgage lenders Fannie Mae and Freddie Mac and Lehman's sell-off and attempts to stay afloat.

Light, sweet crude rose 5 cents to $100.92 on the New York Mercantile Exchange after briefly crossing below the $100 mark for the first time in five months. Investors tracked Hurricane Ike, which churned across the Gulf of Mexico toward the Texas coast and refining and drilling operations in the region.

The Commerce Department's report today that retail sales fell by 0.3 percent in August unnerved some investors who expected that a decline in gas prices from their mid-July high would leave more money in consumers' wallets.

Not all news was unwelcome today. Another government report showing a bigger-than-expected drop in wholesale inflation — the steepest decline in nearly two years — at least eased some worries about pricing pressure. And a Reuters/University of Michigan survey on sentiment showed consumers are more upbeat than they were earlier in the summer when energy prices were higher.

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But the upbeat news couldn't offset investors' worries about Lehman. Many market observers are doubtful that Lehman will remain independent. Executives have been working to find someone willing to buy all or part of the company, bankers and industry executives close to the situation told The Associated Press.

Bank of America, Japan's Nomura Securities, France's BNP Paribas, Deutsche Bank and Britain's Barclay's have been mentioned this week as potential buyers for the beleaguered investment bank.

"Hopefully over the weekend there's some merger activity. It would be great for the market to see," Croft said.

Copyright © 2008 The Seattle Times Company

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