Updated from 9:15 a.m. EDT

Stocks in the U.S. started Friday with losses as investors contended with a mixed bag of reports about the fate of harried brokerage

Lehman Brothers

(LEH)

and a disappointing retail-sales report.

The

Dow Jones Industrial Average

was down 148 points at 11,285, and the

S&P 500

was giving back 13 points to 1235. The

Nasdaq

was lower by 29 points at 2228.

On Thursday, the major indices opened with wide losses as traders hammered away at financial-services names Lehman Brothers and

Washington Mutual

(WM) - Get Report

. However, stocks staged a sharp rally in the final minutes of trading, sending WaMu shares higher as Lehman continued to languish.

Following the market's close,

The Wall Street Journal

reported that Lehman was shopping itself to, among others,

Bank of America

(BAC) - Get Report

. The

Journal

and

Reuters

both listed British bank

Barclays

(BCS) - Get Report

as another potential buyer. Both publications also said that the Treasury and

Federal Reserve

were offering counsel to Lehman as it explores its options. A solution to

Lehman's recent woes

could help restore confidence in U.S. financial markets.

Washington Mutual

, late Thursday, said it has $50 billion in liquidity and announced that its retail deposit base remained at levels reached at the end of 2007. The company also said it expects its third-quarter loan-loss provision to be about $4.5 billion, down from $5.9 billion in the second quarter.

Ratings agency Moody's

downgraded WaMu's credit rating

to below investment grade, citing "reduced financial flexibility." Goldman Sachs had a more positive take, upgrading shares of WaMu to neutral from sell. According to a

Bloomberg

report, the company might be able to avoid another capital raise, Goldman said.

Bloomberg

also reported that the company may have to sell some of its deposits and branches as it struggles to raise capital. Thursday's late rally aside, shares of the Seattle bank have been pounded in recent days on fears about its sizable exposure to bad mortgage debt.

Goldman Sachs had a more positive take, upgrading shares of WaMu to neutral from sell. According to a

Bloomberg

report, Goldman said the company might be able to avoid another capital raise.

Reflecting broader trouble in credit markets, a sale of $228 million in

Clear Channel

bonds last week failed to attract as many buyers as underwriters had anticipated.

In the realm of commodities, crude oil was rising $1.09 to $101.96 a barrel. Oil refiners were shutting down some production as Hurricane Ike menaced the Texas Gulf Coast. Gold was up $12.60 to $758.10.

As for economic data, RealtyTrac said that August foreclosure filings were up 27% year over year to 303,000, or one out of every 416 U.S. homes.

The Bureau of Labor Statistics' August producer price index fell 0.9%, a broader decline than expected by economists and down from a 1.2% uptick in July. The core read on inflation rose 0.2%, a narrower increase than 0.7% in July. The Census Bureau's retail sales figures showed a decline of 0.3% for August, whereas analysts were looking for an increase of 0.3%. Excluding autos, retail sales fell 0.7%. A consumer sentiment survey from the University of Michigan is expected later this morning.

Longer-dated U.S. Treasury securities were mixed. The 10-year note was up 2/32, yielding 3.63%. The 30-year lost 6/32 to yield 4.23%. The dollar was losing ground vs. the euro and pound but rising against the yen.

Indices abroad were mixed. The FTSE in London was higher, while the Dax in Frankfurt was down fractionally. Japan's Nikkei closed with gains, and the Hang Seng in Hong Kong took losses.