Dow slips despite positive jobs data

The stock market offered a reminder Friday that even if the U.S. job market is improving, there's plenty to worry about elsewhere in the world.

The unemployment rate fell in December to 8.5 percent, the lowest level in nearly three years. Yet, stock indexes teetered between small gains and losses all day as traders fretted about Europe's ongoing financial drama.

The Dow Jones industrial average fell 55.78 points, or 0.45 percent, to 12,359.92.

Italy's borrowing costs spiked to dangerously high levels, and the euro fell to a 16-month low against the dollar. U.S. bank stocks fell on concerns the debt crisis will spread through the financial industry.

The Standard & Poor's 500 index fell 3.25, or 0.25 percent, to 1,277.81. The Nasdaq composite was up 4.36, or 0.16 percent to 2,674.22.

Both the S&P and the Dow gained more than 1 percent during the first week of 2012.

Europe's debt and China's slowing economy are overshadowing signs of strength in the U.S. economy, said Doug Cote, chief market strategist at ING Investment Management. "The global risks continue to exert their weight," he said.