US blue chip stocks nudged higher on Friday as take-over speculation drove up shares of Honeywell International Inc. But concerns over more aggressive interest-rate hikes following a strong April jobs report limited gains. Honeywell jumped nearly 5 percent and was the biggest upward influence on the Dow, on market talk that United Technologies Corp had renewed its interest in buying the rival aerospace and industrial conglomerate. Markets had a muted response to the government's stronger-than-expected employment report. While it lifted hopes about the economy, the positive sentiment was tempered by fears of more aggressive interest-rate hikes. That weighed on shares sensitive to higher rates, such as banking stocks. Citigroup Inc and Bank of America both fell, helping drag the S&P 500 into negative territory.
The Dow Jones industrial average was up 5.02 points, or 0.05 percent, to end at 10,345.40. The Standard & Poor's 500 Index was down 1.28 points, or 0.11 percent, to close at 1,171.35. The Nasdaq Composite Index was up 5.55 points, or 0.28 percent, to finish at 1,967.35.
For the week, the Dow was up 1.50 percent, the S&P 500 rose 1.25 percent and the Nasdaq was up 2.38 percent.
The non-farm payrolls report showed US employers created a surprisingly large 274,000 new jobs in April.
"The numbers were encouraging in the sense that we had a good report. That raises the expectation that corporate profits over the near term are going to perhaps exceed expectations," said Anthony Chan, managing director and senior economist at J.P. Morgan Asset Management.
"But for equity market investors, we know that faster growth is a two-edged sword. If the economy grows a little faster than expected, it may raise the wrath of the central bank and cause interest rates to go up, either for an extended period of time or more aggressively."
US Treasuries retreated as the burst of employment startled investors into thinking the Fed would keep raising interest rates. The benchmark 10-year note's yield rose to 4.27 percent, up from 4.16 percent the previous day.
The employment report helped shares of Monster World-wide Inc, which operates the No 1 job search Web site, to shoot up 7 percent, or $1.70 to $25.36.
But it hit stocks of financial services and real estate companies. Citigroup was down 29 cents at $46.59 and Bank of America was 36 cents lower at $45.49.
Lifting the blue chips was Honeywell, up $1.68 at $36.85. United Technologies was down 36 cents at $102.03.
"Honeywell is helping the Dow," said Evan Olsen, head of equity trading at Stephens Inc "Certainly, take-over speculation going into a weekend is going to be good for the market."
The tech-heavy Nasdaq was boosted by Pixar Animation Studios, up 5 percent, or $2.43 at $48.70 a day after it reported higher-than-expected earnings on strong DVD sales for "The Incredibles" and said it had renewed talks reviving a lucrative distribution deal with the Walt Disney Co.
Boeing rose $1.27, or 2 percent, to $61.01 following news that Northwest Airlines ordered 18 Boeing 787 twin-jet airliners as part of its long-term fleet renewal program.
Trading was moderate, with 1.37 billion shares changing hands on the New York Stock Exchange, below the 1.46 billion daily average for last year. About 1.54 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.
Decliners outnumbered advancers on the New York Stock Exchange by about 9 to 8.
Advancers outnumbered decliners by about 8 to 7 on Nasdaq.
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