Another example that the economy is going in reverse was the release of the July consumer sentiment today.
Yet another story on the European crisis is below.
Here are the top financial stories of the day:
1) Google, M&A Boost Stocks- From the Wall Street Journal
Stocks advanced, as blowout earnings from Google and a big corporate takeover overshadowed another warning about the U.S.'s credit rating and a depressed reading on consumer sentiment.
The Dow Jones Industrial Average rose 42.61 points, or 0.3%, to 12479.73. The blue-chip index bobbed between positive and negative territory much of the day before the late rise. Caterpillar led the industrials higher, rising $1.78, or 1.7%, to 109.36, on the New York Stock Exchange
For the week, the DJIA fell 1.4%, the worst weekly decline since the week ended June 10 and the eighth decline in the past 11 weeks.
The Standard & Poor's 500-stock index rose 7.27 points, or 0.6%, to 1316.14, leaving it down 2.1% for the week.
The energy sector was the biggest advancer on Friday, rising 2.3%, boosted by rising crude oil prices and merger-and-acquisition activity.
Petrohawk Energy soared 14.68, or 62%, to 38.17, after Australia's BHP Billiton agreed to buy the company in a deal valued at more than $15 billion, including debt.
The Nasdaq Composite Index rose 27.13 points, or 1%, to 2789.80, fueled by Google's upbeat quarterly report. The technology-oriented index fell 2.5% this week to snap a three-week win streak.
The Internet-search giant late Thursday posted a surprisingly robust 36% jump in quarterly profit on record revenue. Google experienced strength in its core search business and gained traction with its newer operations, including its new social network Google+. Shares surged 68.68, or 13%, to 597.62, on the Nasdaq Stock Market.
2) July consumer sentiment worst since March 2009-From Reuters
Consumer sentiment deteriorated in early July to the lowest level since March 2009 on increasing pessimism over falling income and rising unemployment, a survey released on Friday showed.
Confidence in government economic policies also curdled, the Thomson Reuters/University of Michigan survey showed. U.S. lawmakers are wrangling over a budget deal that would allow the government to raise the debt ceiling -- needed so the United States can fund its obligations next month.
The preliminary reading for the consumer sentiment index dropped to 63.8 in July from 71.5 the month before, falling far short of expectations of an increase to 72.5, according to a Reuters poll of economists.
The survey's barometer of current economic conditions fell to 76.3, the lowest since November 2009, from 82.0. The gauge of consumer expectations was also at its lowest since March 2009, tumbling to 55.8 from 64.8.
"Whenever the Expectations Index has been this low in the past, the economy has been in recession," survey director Richard Curtin said in a statement.
"Nonetheless, one month's data is insufficient to signal a renewed downturn, particularly if a last-minute agreement on the debt ceiling results in a partial restoration of confidence."
U.S. stocks cut gains immediately after the report, while Treasury prices pared losses and the euro fell to a New York session low against the dollar.
Overall, the data suggests real consumer spending in the second half of the year may be barely higher than the first half, the survey said.
Twice as many consumers reported hearing about new job losses compared with job gains, while half of all consumers said the economy had recently worsened. Last week, data showed the economy added a scant 18,000 jobs in June.
"We remain in a very slow recovery with extraordinarily grudging employment. The public at large still feels the recovery is, at best, a neutral factor," said Patrick O'Keefe, director of economic research at J.H. Cohn in New York.
"They're not seeing a lot of benefits."
The proportion of consumers that rated government economic policies as poor rose to 52 percent in early July, up from 40 percent in June.
The inflation outlook improved with the survey's one-year inflation expectation easing to its lowest level since February at 3.4 percent from 3.8. The five-to-10-year inflation outlook fell to 2.8 percent from 3.0 percent.
3) 8 banks flunk European stress test-From the AP
Eight of 90 banks have flunked stress tests that project how they would fare in another recession, and 16 more barely passed, Europe's banking regulator said Friday.
The failing banks should "promptly" take steps to strengthen their financial cushions against losses, the
European Banking Authority said as it released the results. They now have to raise a total of euro2.5 billion ($3.5 billion).
Spain, whose many local savings banks have been closely watch by analysts, fared worst, with five banks failing to prove that their capital buffers were strong enough to sustain the regulator's stress scenario. The banks were Catalunya Caixa, Caja de Ahorros de Mediterraneo, Banco Pastor, Unnim and Grupo Caja.
Two Greek banks, EFG Eurobank and ATEBank, also flunked, as did Austria's Oesterreichische Volksbank AG.
The banks that barely passed have been asked to strengthen their finances along with the ones that failed.
The EBA lacks the power, however, to force banks to raise more capital -- whether from investors or governments -- or to make them merge or sell businesses. Only their national governments can do that.
The tests are a key element in Europe's fight against the debt crisis. With most market watchers expecting Greece -- and possibly the other bailout victims Ireland and Portugal -- to eventually reneg on part of their massive debt piles, concerns over what such a default would do to banks around the continent has triggered panic on financial markets in recent weeks.
Officials hope that the stress tests identify weak banks and make them strengthen their finances. While the test scenarios did not include a default by a European country, each bank had to report its exposure to sovereign debt, allowing economists to run their own anlyses.
The test, run by national banking regulators, simulated what would happen to bank finances during a recession where growth falls more than 4 percentage points below EU forecasts. For the 17-country eurozone, that would be a drop of 0.5 percent this year and 0.2 percent next year.
The banks were required to maintain a financial pad of at least 5 percent of their loans, investments and other assets. The financial pad -- dubbed Core Tier 1 capital -- stands ready to absorb unexpected losses and is therefore a key measure of a bank's stability.
One bank, Germany's Helaba, pulled out of the tests in a dispute with the EBA over whether large part of the bank's capital in the form of non-voting holdings by government would count.
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