Stocks wavered in a tight range Friday as investors remained cautious about the strength of European banks following the results of regulatory reviews. Investors were also sorting through another batch of domestic earnings looking for clues about economic growth.
The mixed trading came as European regulators released results of so-called "stress tests" on banks, which are designed to predict whether banks could survive under tougher economic conditions.
The Dow Jones industrial average fell 14 points, sticking to the tight range it has traded in throughout the day. While major indexes are not moving much after the results, the euro slipped modestly against the dollar. The euro fell to $1.2806 in afternoon trading.
Analysts say the criteria used for the tests is more important than the results themselves.
David Chalupnik, head of equities at First American Funds, said investors want to make sure the tests were rigorous enough to show which banks would struggle if economic conditions got worse.
Seven of the 91 banks tested across the continent failed the test. Still there were few details about the criteria used in the tests beyond the Committee of European Banking Supervisors saying the banks that failed the test would see capital levels fall below sufficient levels if the prices of government bonds they invested in fell sharply.
There is skepticism about the results because few details are known about how they were performed.
"There's obviously a lot of smoke and mirrors in these types of tests," said Albert Meyer, portfolio manager of the Mirzam Capital Appreciation Fund. "They no doubt provide us with numbers that aren't too alarming, even if they are correct."
The tests could eventually remove some uncertainty about whether rising government debt in many European countries is hurting financial companies. The continent's debt problems have sent stocks falling worldwide since April amid concerns they could slow the global economic recovery.
Brian Peardon, a wealth adviser at Harrison Financial Group, said the true impact on the market won't come until next week because there is so much information to sort through.
"It will take the weekend to digest whether they're good or bad," Peardon said.
In afternoon trading, the Dow Jones industrial average fell 14.15, or 0.1 percent, to 10,308.22. The Standard & Poor's 500 index fell 3.16, or 0.3 percent, to 1,090.51, while the Nasdaq composite index fell 11.78, or 0.5 percent, to 2,234.11.
Rising stocks narrowly outpaced those that fell on the New York Stock Exchange, where volume came to 480.2 million shares.
European markets had already closed by the time the test results were released, so investors there couldn't make moves following the announcement. German shares rose after a closely watched business climate index rose unexpectedly for the fifth straight month. Germany's DAX index rose 0.4 percent, Britain's FTSE 100 fell less than 0.1 percent, and France's CAC-40 rose 0.2 percent.
In the U.S, earnings reports Friday were more mixed than on Thursday, when upbeat news on corporate results sent stocks sharply higher. That kept big moves in check throughout the day as well.
Verizon Communications Inc., Ford Motor Co., Microsoft Corp. and American Express Co. all reported earnings that topped forecasts. Their results also showed that businesses and consumers are increasing their spending as the economy recovers.
Verizon added more new wireless customers during the second quarter than its top rival, AT&T Inc. Ford's sales jumped 28 percent in first half of the year, nearly double the pace of the industry. And American Express said customers are spending close to pre-recession levels, a sign that shoppers are gaining confidence in their personal finances.
Among the disappointments, Amazon.com Inc. missed profit forecasts when it reported after the market closed Thursday. The online retailer's expenses jumped sharply, which concerned traders.
Energy services company Schlumberger Ltd. reported a big jump in profit, but its earnings appeared to be more affected than competitors like Halliburton Co. by the ban on deep water drilling in the Gulf of Mexico.
Verizon rose 84 cents, or 3.1 percent, to $27.84. Ford jumped 43 cents, or 3.6 percent, to $12.52. American Express rose 53 cents to $43.72, while Microsoft fell 57 cents, or 2.2 percent, to $25.27. Amazon dropped $6.08, or 5.1 percent, to $113.99. Schlumberger fell $2.88, or 4.7 percent, to $58.42.
Bond prices traded in a tight range. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.95 percent from 2.94 percent late Thursday.
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