Stocks Fade to Mixed Close After Early Rally

At the same time, initially robust gains for the U.S. dollar tapered off somewhat, though the greenback was still stronger, adding 0.3% against the euro at $1.5413. Against the yen, the dollar firmed by 0.9% at 105.31.

Each of the indices had launched the session higher in reaction to the Labor Department's nonfarm payrolls data, which showed a decline of 20,000 workers in April, whereas a Bloomberg survey predicted the number would be more around 75,000. Earlier this week, the ADP's figures showed a better-than-expected climb of 10,000 jobs last month.

"Basically, what I really think this indicates is that the economy is flat-lining, and right now flat-lining is better than what the market perceptions were," said Michael Strauss, chief economist with Commonfund, who had put the job-loss figure at 25,000. "It suggests that we're not getting the recession that a lot of economists and market participants have been forecasting for the past six to nine months."

"Historically, when we've been in the heat of a recession, we lost 250,000 jobs a month," Strauss continued. "We've lost 250,000 for the quarter. That's a stagnant economy, not a down economy."

Owen Fitzpatrick, head of equity strategy with Deutsche Bank Private Wealth Management, noted that, because the focus has shifted from worries about the financial sector to unease regarding whether or not the slowdown is transforming into a recession, the data "does alleviate some of that concern."

Still, his firm continues to call for a mild recession in the second and third quarters. Also, because the slowdown is being led by consumers, who are dealing with a host of issues aside from the housing crisis, he also doesn't expect the recovery to be a quick one.

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