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Stocks escape storm-shortened week with gains

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By Hibah Yousuf and James O’Toole, CNNMoney

NEW YORK (CNNMoney) – U.S. stocks sank Friday afternoon as investors looked ahead to the election next week.

The Dow Jones industrial average and the Nasdaq fell 1.0%, while the S&P 500 shed 0.8%. The Dow and Nasdaq are poised to finish the short week of trading relatively unchanged while the S&P 500 was still slightly higher.

The market was closed on Monday and Tuesday due to Hurricane Sandy. The area around the New York Stock Exchange remained without power for a fourth straight day Friday, with the city still struggling to recover in the aftermath of the storm.

Stocks initially pushed higher Friday after the monthly jobs report showed that the economy added 171,000 jobs last month. Economists surveyed by CNNMoney expected 125,000 jobs. The unemployment rate ticked up to 7.9% from 7.8% in September, in line with expectations.

The monthly report has taken on increased importance amid the economic downturn. President Obama and Republican rival Mitt Romney have also been focusing much of their campaigns on who can create more jobs. The report comes just four days before the elections.

“We’ve seen a steady improvement in economic data over the last couple of weeks, and this is another positive data point,” said Art Hogan, managing director at Lazard Capital Markets. “But after the initial reaction, the market has put the jobs report in the rear view mirror and is quickly moving onto what comes next week with the election, and what that will mean for the fiscal cliff.”

Related: Stock market predicts Obama win. Or is it a loss?

According to a CNNMoney survey of investment strategists last month, the pending fiscal cliff poses the biggest threat to stock market.

The Congressional Budget Office and most economists believe Washington’s failure to address the fiscal cliff — the simultaneous onset of tax increases and spending cuts that will be triggered on Jan. 1 — would push the country back into recession and drive unemployment upward. That, of course, would put pressure on financial markets

“No matter who the inhabitant is in the White House, we need some sort of resolution on the fiscal cliff,” said Hogan. “That’s what’s looming and affects economic growth almost immediately.”

In other economic news, factory orders rose 4.8% in September, according to data from the Census Bureau.

Fear & Greed Index

World Markets: European stocks ended mixed. Britain’s FTSE 100 slipped slightly, while the DAX in Germany added 0.3%, and France’s CAC 40 gained 0.2%.

Asian markets closed higher. The Hang Seng in Hong Kong added 1.3%, and Japan’s Nikkei rose 1.2%. The Shanghai Composite gained 0.6%.

Companies: Shares of Starbucks jumped 10% Friday, one day after the coffee shop operator reported strong same-store sales growth and increased its dividend.

LinkedIn’s shares were flat even though the social media company topped Wall Street’s expectations Thursday afternoon.

Shares of Priceline surged 9% after the online travel site beat earnings forecasts. The good news spilled over to other online travel sites, with shares of TripAdvisor , which also reported earnings Thursday.

Verizon said that Hurricane Sandy may have a “significant” impact on its fourth-quarter results. The company said it is working to restore communications services to affected customers, but that it could take some time. Shares fell 1.3% Friday.

Shares of Restoration Hardware jumped more than 30% in their stock market debut. The home decor retailer raised $124 million in its initial public offering after pricing 5.16 million shares at $24 a piece, the high end of its estimated range.

Warren Buffett’s Berkshire Hathaway is buying Oriental Trading Company, a leading maker of party favors and novelties based in Berkshire’s hometown of Omaha. The price of the transaction was not disclosed. The Wall Street Journal reported it was a $500 million deal. Berkshire Hathaway is also scheduled to release its report after the closing bell.

Currencies and commodities: The dollar was higher against the euro, the British pound and the Japanese yen.

Oil for December delivery fell 2.5% to $84.88 a barrel.

Gold futures for December delivery also fell sharply, slipping 2.1% to $1,679.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury also fell, pushing the yield up to 1.73% from 1.71% late Thursday.