U.S. stocks closed lower Friday, after a session made volatile by options
expirations and index rebalancing and that featured a record high United
Technologies.
The Dow Jones Industrial Average was off its morning highs, up 18.10
points at 10,899.77.
The S&P 500 was up 0.25 points at 1,270.69, but the Nasdaq Composite moved
down 4.64 points at 2,255.99.
There were more than 2 billion shares traded on the New York Stock
Exchange, where declining shares outnumbered rising stocks by 16 to 15. In
the Nasdaq market, more than 2.3 billion stocks traded and there were 16
falling stocks for every 13 on the rise.
Stock-price movements Friday were driven largely by "quadruple
witching" -- simultaneous expirations of index futures, options on index
futures, stock options and individual stock futures.
The expirations tend to create volatility and exaggerate stock-price
movements.
In addition, the rebalancing of the S&P 500 and the Nasdaq 100 indexes
also made trade unpredictable.
"There were a lot of crosscurrents today and it is hard to know what is
fundamental and what is technical," said Peter Boockvar, equity strategist
at Miller Tabak.
"The market has had a big runup in the last few weeks and there are signs
that the market is running out of gas," said Boockvar. "So people took
some money off the table."
Tom Schrader, head of listed trading at Stifel Nicolaus Capital Markets,
said, "The majority of the year-end rally has happened."
He said that "tax-loss selling" and "hesitation" about holiday retail
sales could challenge stock indexes for the next week, but bargain hunting
could lift stocks in the final week of the year. .
Friday's market drew some support from a retreat in energy prices.
"The new magic number for energy is crude at $60," said Art Hogan, chief
market strategist at Jefferies & Co. "The market seems enthusiastic about
new oil forecasts for supply and demand. And any time crude trades below
$60 a barrel, the stock market tends to lift."
The front-month crude contract closed down $1.93 at $58.06 a barrel.
In other positive news, the Commerce Department said the nation's
current-account deficit narrowed by 1% to $195.8 billion in the third
quarter, marking the second straight quarter of a narrowing deficit.
Gold futures closed down 70 cents at $505.90 an ounce, the lowest level
since Nov. 30. Gold has been under pressure most of this week, after the
front-month contract on Monday touched a 25-year high of $543 an ounce.
The dollar weakened against the euro after a better-than-forecast reading
contained in Germany's influential Ifo confidence survey. The euro last
was up 0.4% at $1.2008.
The dollar, which has endured a rout this week due to strong signals from
the Federal Reserve rate increases may be nearing an end, last was down
0.7% at 115.69. Overnight the dollar touched a seven-week low of 115.59
yen.
Treasurys benefited from the expectations that the Fed's rate-tightening
cycle will be over soon. The benchmark 10-year note closed up 5/32 at
100-14/32 with a yield of 4.446%, down from 4.54% last Friday.
Stocks in play
Among Dow Jones Industrial Average components, United Technologies closed
43 cents higher at $58.03 on a CIBC upgrade, after earlier hitting a
record high of $58.89.
Caterpillar Inc. rose 1.6% to $59.64 after news of stronger machines
sales.
Another Dow industrials component, General Motors Corp. fell 1% to $21.89.
Rick Wagoner, the automaker's chairman and chief executive, told revelers
at a holiday party late Thursday that the company's revenue will improve.
And yet another Dow industrials member, Johnson & Johnson rose 1.16% to
$60.86. The company agreed to buy insulin-pump maker Animas Corp. for $518
million.
Oracle finished 10 cents lower at $12.71. Merrill Lynch upgraded Oracle to
buy following earnings results, while William Blair downgraded it.
Adobe Systems shot up almost 12% to $38.90 after the company reported a
38% rise in quarterly net income.
XM Satellite Radio Holdings fell 4% to $29.65. J.P. Morgan downgraded the
stock to neutral from overweight, and cut its peer Sirius Satellite Radio
to underweight from neutral. Sirius shares dropped 3.7%.
Retail stocks were highlighted by uncertainty about the strength of
Christmas sales, as Urban Outfitters dropped 1.4% to $26.16. and the S&P
500 Retail Index lost 0.59% to 466.23.
Shares of RadioShack tumbled 6.5% to $22.19 after reporting that sales of
wireless merchandise weren't doing as well as hoped.
The airline sector was lifted Friday by the decline in energy futures,
which stoked hopes that fuel costs will drop. The Amex Airline Index rose
3% to $52.22 as discount carrier JetBlue Airways ran up 5.7% to $20.65.
This MarketWatch news update is provided to you courtesy of Thomson
Financial.
This is Thomson Financial's Market Commentary, which is issued three times
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p.m.). The information herein is believed to be true and accurate. We
take no responsibility for inaccurate information and reserve the right to
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SOURCE Thomson Financial Corporate Group
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