Stocks are sharply trimming gains as an upbeat jobs report is overshadowed by a big decline in a consumer confidence gauge.

NEW YORK (TheStreet) -- The major U.S. stock averages were sharply trimming gains Friday, with the Nasdaq slumping back into the red, as an upbeat domestic jobs report was overshadowed by a big decline in a consumer confidence gauge.

The Dow Jones Industrial Average was up 37 points, or 0.28%, at 13,111. The blue-chip index started the session up more than 7.5% in 2012.

The S&P 500 was up 2 points, or 0.15%, at 1416. The Nasdaq was down more than 3 points, or 0.11%, at 2986.

The University of Michigan Consumer Sentiment Index on Friday showed a big drop for December, with a reading of 74.5, the weakest number since August and down from 82.7 the prior month. Economists, on average, were expecting a decline to 82.4.

The decline was driven mainly by a lower outlook.

"Fiscal cliff concerns were surely a play," said Ian Lyngen, a strategist at CRT.

Before the market open, the Bureau of Labor Statistics said Friday that nonfarm payrolls added 146,000 jobs in November, up from a downwardly-revised figure of 138,000 in October. Economists had predicted that 93,000 jobs would be added in November.

Nonfarm private payrolls increased by 147,000, down from an upwardly revised 189,000. Expectations were for a rise of 95,000.

The unemployment rate fell to 7.7% from 7.9%; economists forecast the rate to remain at 7.9%.

Average hourly earnings rose 0.2%, while the average workweek stayed at 34.4 hours, both as expected.

"The unemployment rate continues to hold below 8% and we can no longer attribute this to volatility but neither can we say it is due to falling participation since the participation rate over the last three months, at an average of 63.7%, is identical to the average for the three months ended August, but the unemployment rate has dropped to an average of 7.8% from 8.2% on the same basis," noted John Ryding and Conrad DeQuadros, the founders of research firm RDQ Economics. "The unemployment data are painting a brighter picture on the economy than any other data series we can think of and, therefore, are out of sync with other indicators and hard to understand."

"Our best take is that the economy is growing at a moderate rate at the end of 2012 despite the uncertainties of the fiscal cliff and the impact of Sandy -- a testament to the resiliency of the U.S. economy," they said.

Economists expect data Friday to show that consumer credit increased by $10 billion in October, down from an expansion of $11.4 billion in September. The report is due at 3 p.m. EST.

Stocks rose Thursday as shares of technology behemoth Apple (:AAPL) rebounded and investors watched the U.S. "fiscal cliff" debates with a bit more optimism.

"Apple is a fast-growing technology company that dominates the consumer products it participates in, but it is priced as a slow growing industrial company," said Troy Logan, managing director and senior economist at Warren Financial Service. "We see this in the price to earnings ratio. Apple is a cash generating machine that -- even as their stock becomes more volatile -- by the end of 2016 will generate shareholders about half of its current stock price in cash. Apple is currently trading at about $550 per share. In the next four years it will generate approximately $250 per share in cash. "

The European markets turned higher after the jobs report. The FTSE 100 in London was up 0.33% and the DAX in Germany was up 0.08%. Earlier the benchmark indices were trading in the red as the German Bundesbank lowered its 2013 economic growth outlook for the country as the eurozone sovereign debt crisis persists, and as the Italian ten-year government bond ticked up in the face of political uncertainties.

Ahead of the nonfarm payrolls release, Japan's Nikkei average closed down 0.19% on Friday and Hong Kong's Hang Seng index finished off by 0.26%.

In Japan, tsunami fears were sparked by a 7.3-magnitude quake that struck off the country's eastern coast.

Gold for February delivery was falling $3.10 at $1,698.70 an ounce at the Comex division of the New York Mercantile Exchange, while January crude oil contracts were up 14 cents at $86.40 a barrel.

The benchmark 10-year Treasury was falling 10/32, raising the yield to 1.625%. The dollar was up 0.39%, according to the U.S. dollar index.

In corporate news, Netflix (:NFLX) CEO Reed Hastings and his company received a Wells Notice from the Securities and Exchange Commission for a social network post.

Shares were popping more than 4%.

The controversial chief of the DVD-rental and streaming-media company received a Wells Notice for a Facebook (:FB) post that claims Hastings violated the Regulation Fair Disclosure, Section 13(a) of the Securities Exchange Act and Rules 13a-11 and 13a-15.

Staff at the SEC are recommending Hastings and Netflix face civil enforcement over the post the executive made in July, which claimed Netflix users "had enjoyed over 1 billion hours" of content in June. The company didn't issue a press release or file an 8-K with the information at the time, which the SEC says Hastings should have done because it was "material" investor information.

Palo Alto Networks (:PANW) said Thursday it swung to a fiscal first-quarter loss of $3.5 million, or 5 cents a share.

Adjusted profit in the quarter was 4 cents a share, topping analysts' estimates by a penny as revenue jumped 50% to $85.9 million.

Shares were tumbling more than 3%.

Smith & Wesson (:SWHC) swung to a profit of $21.1 million, or 31 cents a share, in the fiscal second quarter. The board of the gun maker also approved $20 million in stock buybacks.

Shares were slipping over 1%.

Amarin (:AMRN) announced Thursday plans to raise $100 million in debt financing and the intention to hire 250 to 300 sales representatives, in a go-it-alone launch strategy for lipid-lowering prescription fish-oil pill Vascepa.

The announcement disappointed investors who were hoping for a marketing partnership.

Shares were plunging close to 18%.

Research In Motion (:RIMM) was a big loser in premarket trading on Friday amid ongoing uncertainty about the handset maker's long-term prospects.

Shares were up 0.50% in the regular trading session.

United Technologies (:UTX) said that it reached a mutual agreement with TransDigm (:TDG) to terminate the previously announced sale of Goodrich's pump and engine control systems business to TransDigm.

United Technologies shares were up marginally while TransDigm shares were down 1%.

McDonald's (:MCD) shares were upgraded to buy from neutral at Janney Capital.

Shares were up 0.58%.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.

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