U.S. stocks gained ground Friday, nearly erasing the week's losses for the Dow industrials as investors started to look past the latest euro-zone debt drama.
For European markets, however, it was a different story, as the turmoil in Cyprus continued to damp sentiment.
The Dow Jones Industrial Average advanced 90.54 points, or 0.6%, to 14512.03 Friday, bouncing back from a 90-point slide on Thursday, which was its biggest one-day loss since Feb. 25. Cyprus's effort to secure a bailout from its euro-zone partners raised concerns about the region's woes this week.
The Standard & Poor's 500-stock index added 11.09 points, or 0.7%, to 1556.89. The Nasdaq (NDAQ)
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"If you want to find a reason to stay away from the stock market, this week has given you yet another one: this Cyprus situation," said Art Steinmetz, chief investment officer at OppenheimerFunds Inc., which manages $208 billion in assets. "What is interesting to me, though, is the U.S. stock market seems to have shrugged off this latest issue very quickly. You've had continuing strong economic numbers in the U.S. this week. That's the more important story."
A deadline looms on Monday that could result in the European Central Bank withdrawing support from Cyprus's banking system. The Cypriot episode has led to losses for U.S. stocks in recent days. For the week, the S&P 500 fell 0.2%, just its second weekly decline this year. The Dow ended the week lower by just two points, or less than 0.1%.
"Europe is going to continue to wallow in misery for the foreseeable future," Mr. Steinmetz said. "They're still wallowing in the mud, and the U.S. is puttering along at a reasonable pace."
The Stoxx Europe 600 fell 0.1%, capping its biggest weekly loss since mid-November. Germany's DAX slid 0.3%. Demand for Treasury prices rose as investors sought a haven, sending the yield on the 10-year note down to 1.915%.
Some U.S. stock investors declined to position their portfolios defensively going into the weekend, a departure from past euro-zone crises.
"We had those kinds of conversations back in 2008, 2009 and parts of 2010, when the Europe crisis was much more uncertain, but have not had those kinds of conversations around Cyprus," said Patrick Kaser, a managing director at Brandywine Global, which oversees $42 billion in Philadelphia. "One thing that changed last summer was this idea that Europe was going to do whatever it took to support the financial system," Mr. Kaser said. "And the private sector of the U.S. economy has a number of tailwinds now that appear self-sustaining."
In addition to signs of recovery, bulls are pointing to continued stimulus from the Federal Reserve, said Paul Nolte, managing director at Dearborn Partners, which manages about $4 billion in Chicago.
"We're still seeing modest U.S. economic growth and a Fed that's got the printing presses going," said Mr. Nolte. He added he is having a harder time finding underpriced shares of large U.S. companies after the market's gains this year.
Among U.S. stocks, consumer-oriented shares in the S&P 500 led gains across all 10 of the index's sectors. Nike (NKE)
In Asia, Japanese stocks declined, as a strengthening yen undermined exporters' shares. The Nikkei Stock Average slid 2.4%. The yen was on track to close at a 2Â½-week high against the dollar amid disappointment that the new Bank of Japan governor renewed his pledge to expand monetary easing but gave no indication of new, more aggressive stimulus measures.
Meanwhile, China's Shanghai Composite Index and Australia's S&P ASX 200 both gained.
Crude-oil prices gained 1.4%, to settle at $93.71 a barrel, while gold eased 0.5%, to settle at $1,606.20 a troy ounce. The dollar lost ground against the euro.
Elsewhere in the corporate arena, Micron Technology (MU)
Tibco Software (TIBX)
Ad-tracking software provider Marin Software jumped after its initial public offering on the New York Stock Exchange.
Conference-call specialist West Corp. fell after its debut on the Nasdaq Stock Market.
Write to Matt Jarzemsky at email@example.com