The Dow Jones industrial average (INDU) and the S&P 500 (SPX) each lost a fraction of a point, while the Nasdaq (COMP) rose less than 1 point. Earlier, all three major indexes had been up more than 1%.
The mood on Wall Street was positive after the U.S. government said employers boosted payrolls by 120,000 jobs in November, while the unemployment rate eased to 8.6% -- its lowest level since March 2009.
The drop in the unemployment rate was the "big surprise," said Timothy Ghriskey, chief investment officer at Solaris Asset Management.
In a speech to the German parliament Friday, German Chancellor Angela Merkel reaffirmed her support for a fiscal union.
"Merkel is pushing forward for more integration for the eurozone, which would safeguard the region and hold back on the worse case scenario of the eurozone breaking up," said Manoj Ladwa, a senior trader at ETX Capital.
Also, ongoing chatter about the European Central Bank possibly lending hundreds of billions of dollars to the International Monetary Fund to aid Europe's debt-laden countries led to reports that Republicans would try to block any such move. And that further worried investors.
Conservative lawmakers are against the IMF's involvement because it could leave U.S. taxpayers on the hook with a hefty bill.
Developments out of Europe will be the main driver for the stock market's moves as the year comes to a close, said Ghriskey. If European officials can remain on the path toward a solution, stocks will likely end 2011 with modest gains. But roadblocks along the way will pressure the markets.
The dollar rose against the euro, the British pound, and the Japanese yen.
Oil for January delivery ticked up 76 cents to settle at $100.96 a barrel.
Gold futures for February delivery gained $11.70 to settle at $1,747 an ounce.
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