Exxon Mobil Corp. gained 2.1 percent after it reported its most profitable quarter since 2008. Massey Energy Co. jumped 9.8 percent after Alpha Natural Resources Inc. said that it would buy the coal producer in a $7.1 billion deal. Alpha Natural Resources fell 7.2 percent.

The Massey deal suggests "maybe coal isn't dead," said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group. It also raises hopes for similar deals in the future, she said.

Concerns remained over Egypt's impact on oil prices. The country is not a major producer of oil, but it plays a key role in the industry because it controls the Suez Canal, a major route for oil tankers and cargo ships. Crude oil prices rose 3 percent to $92.19 a barrel.

"The market wants to work its way higher," said Sam Stovall, chief investment strategist of Standard & Poor's. "The big worry is the unknown — the cascading effects that could occur."

The Dow Jones industrial average gained 68 points, or 0.6 percent, to close at 11,891.93. The broader Standard and Poor's 500 index rose 10, or 0.8 percent, to 1,286.12. The Nasdaq composite index gained 13, or 0.5 percent, to 2,700.08.

The Commerce Department said Friday that gross domestic product grew at an annual rate of 3.2 percent between October and December. That's up from 2.6 percent in the previous quarter, but below the 3.5 percent analysts had forecast.

Disappointing corporate news was also sending stocks lower. Ford Motor Co. lost 10 percent after its earnings fell short of Wall Street's projections. Amazon.com Inc. fell 7.5 percent after reporting that higher costs cut down its profit margins.

The Dow Jones industrial average fell 13 points, or 0.1 percent, to 11,977 in morning trading. The Standard & Poor's 500 index fell 3, or 0.2 percent, to 1,297.

The Nasdaq composite index fell 27, or 1 percent, to 2,728. The index was not updated nearly an hour after the market opened due to technical problems.

Sara Lee Corp. fell 7 percent after announcing a plan to split into two companies. One, a food and retail business, will keep the Sara Lee name and also operate the Jimmy Dean and Hillshire Farms businesses. The other, which has yet to be named, will hold the current company's beverages and baked goods lines. The company had considered selling the whole business but was unable to get a satisfactory price for it.

Sales of Office 2010 to businesses buoyed the results, as did the popularity of Kinect, Microsoft's new motion-sensing controller for the Xbox 360 video game system.

The results for October through December leaked online more than an hour before they should have been released, prompting a temporary spike in trading before the markets closed. After investors had time to digest the full report, however, it became clear that a solid quarter isn't enough to give the company's shares more than a temporary lift. Companies carefully time the release of key financial information to comply with complex Securities and Exchanges Commission rules.

Much of Microsoft's business depends on selling copies of the Windows operating system and Office desktop software, both of which are tied to the health of the personal computer market.

Revenue in the Windows division plunged 30 percent to $5.1 billion. Microsoft launched Windows 7 in the same quarter of 2009, making for a tough comparison. Meanwhile, in the 2010 quarter, worldwide personal computer shipments only grew about 3 percent as Apple Inc.'s iPad and the promise of more tablet devices to come made consumers think twice about what kind of device to buy.

Meanwhile, investors traded with caution ahead of Friday's release of U.S. growth data in the October-December quarter.

Japan's benchmark Nikkei 225 stock average lost 96.69 points, or 0.9 percent, to 10,381.97 in the morning session. Investors dumped shares in banks, which own large amounts of government bonds.

Mitsubishi UFJ Financial Group, Japan's biggest bank, fell 3 percent to 432 yen ($5.2). Mizuho Financial Group, Japan's No. 2 banking group, declined 3 percent to 159 yen. Sumitomo Mitsui Financial Group was down 2.3 percent at 2,851 yen.

Australia's S&P/ASX 200 was down 0.5 percent at 4,884.10. South Korea's Kospi declined 0.7 percent to 2,099.62.

Standard & Poor's slashed Japan's credit rating for the first time in almost nine years Thursday, issuing a harsh critique of the government's ability to control its ballooning debt.

First-time applications for unemployment rose to 454,000, the highest level since late October. Economists had expected the number to rise to 407,000. Snowstorms in some parts of the country forced companies to lay off workers, economists said.

Caterpillar Inc. rose 0.8 percent after its fourth-quarter profit quadrupled on strong global demand for mining and construction equipment. Time Warner Cable Inc. gained 2 percent after raising its dividend thanks to a 22 percent jump in income last quarter.

AT&T Inc. fell 3 percent, the largest drop in the 30 companies that make up the Dow Jones industrial average. The company reported that new wireless contracts fell to the lowest level in more than five years.

Procter & Gamble Co., the maker of consumer products like Tide detergent, fell 2.9 percent after it failed to meet analyst's expectations.

The Dow Jones industrial average inched up 2 points, or less than 0.1 percent, to 11,987. The index broke through the 12,000 mark yesterday for the first time since June 2008 before slipping in the late afternoon.