(Reuters) - Stocks dropped for a fifth straight day on Friday after weak data on the economy and a setback on a debt deal discouraged investors, pushing the S&P 500 briefly below a key technical level. The Dow, the Nasdaq as well as the S&P fell more than 1 percent early in the session, but soon pared losses after the S&P hit its 200-day moving average, an important level of technical support.

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(Reuters) - The U.S. economy stumbled badly in the first half of 2011 and came dangerously close to contracting in the January-March period, raising the risk of a recession if a stand-off over the nation's debt does not end quickly. The Commerce Department data on Friday also showed the current lull in the economy began earlier than had been thought, with the growth losing steam late last year.

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(Reuters) - Chevron Corp, the second-largest U.S. oil company, reported a 43 percent jump in quarterly profit on Friday, beating Wall Street forecasts as high oil prices and fat refinery margins offset a drop in its oil output. Chevron's surging earnings were the latest in a string of huge profits reported this week by the industry that has benefited from the highest oil prices in nearly three years. Exxon Mobil and Royal Dutch Shell both reported higher earnings this week, boosted by their acquisitions and shifts into new projects.

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(Reuters) - BSkyB will hand out 1 billion pounds ($1.6 billion) to placate investors who lost out when a phone-hacking and police corruption scandal forced News Corp to drop its bid for the satellite broadcaster. BSkyB, whose board on Thursday voted unanimously to keep the embattled James Murdoch as its chairman, will return 750 million pounds to investors with a share buy-back and a further 253 million via a 20 percent boost to the final dividend.

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(Reuters) - The "Great Recession" was even greater than previously thought, and the U.S. economy has skated uncomfortably close to a new one this year. New data on Friday showed the 2007-2009 U.S. recession was much more severe than prior measures had found, with economic output declining a cumulative of 5.1 percent instead of 4.1 percent. The report also showed the current slowdown began earlier and has been deeper than previously thought, with growth in the first quarter advancing at only a 0.4 percent annual pace.

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(Reuters) - Ireland's insistence that it is different from Greece and the rest of the euro zone periphery appears finally to be striking a chord among investors. Irish sovereign debt prices staged an impressive rally this week in spite of growing bond market volatility elsewhere in the euro zone, which was hit by doubt over the effectiveness of the latest bailout plan for Athens and concern about the ability of Italy and Spain to weather the storm.

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(Reuters) - China's Alibaba Group said it has reached an agreement with Softbank Corp and Yahoo Inc that promises Alibaba could receive up to $6 billion from an initial public offering or liquidation of its e-payment unit, Alipay. The agreement between the three parties capped months of intense negotiations sparked by a highly public spat over the transfer of Alipay to a company wholly owned by Alibaba founder Jack Ma, a move that Yahoo claimed it was not aware of.

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(Reuters) - Merck & Co (MRK.N) plans to slash thousands more jobs by late 2015 to wring out an additional $1.5 billion in annual cost savings. The No. 2 U.S. drugmaker said on Friday it would reduce its workforce by an additional 12 to 13 percent, compared with the 100,000 employees it had at the end of 2009.

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(Reuters) - Stocks rose on Thursday as better-than-expected data on home sales and employment lent support to the market after equities suffered their worst day in eight weeks in the previous session. But trading was volatile as investors awaited a key vote on a bill to cut the U.S. deficit. A gridlock in talks over the country's debt ceiling and a possible downgrade of the United States' credit rating have weighed on global equities. The S&P lost 2.6 percent for the week while the Dow fell 2.8 percent. The Nasdaq was off 2.7 percent.

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(Reuters) - U.S. lawmakers are eyeing a popular tax deduction for mortgage interest as they look for ways to fill record budget deficits, although any changes are likely to await a broad reworking of the tax code. Two forces are conspiring in a way that could put the long-cherished deduction on the chopping block: a need to raise more revenues and a feeling among policymakers that government incentives for housing have been too generous.

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