NEW YORK – Stocks finished strong Friday, capping a second straight week of gains, as the expiration of February options and hopes that war may be averted gave investors some reasons to buy. Tame U.S. inflation numbers failed to cause a big stir.
The Dow Jones industrial average ended up 103.15 points, or 1.30 percent, at 8,018.11. During the day, the Dow average swung 185 points between its high and its low. The Standard & Poor's 500 Index gained 11.07 points, or 1.32 percent, to 848.17, after hitting a low of 831.48 earlier. The technology-laced Nasdaq Composite Index gained 17.79 points, or 1.34 percent, to end at 1,349.02.
For the week, the Dow is up 1.38 percent, while the Standard & Poor's 500 is up 1.59 percent. The Nasdaq is up 2.96 percent.
"There was some unwinding going on that caused that late rally. It's not unusual to see the market move on expiration day because there's arbitrage that needs to be unwound," said Todd Clark, head of listed trading at Wells Fargo Securities.
Helping to fuel the rally was the simultaneous expiration of stock options and stock index options, which often leads to additional volatility. The expirations can cause wild swings in prices as traders close out their positions, sometimes affecting underlying stock prices and the market.
"Much of this rally going on today is partly due to options-related trading and partly due to the oversold position we had last week," said James Park, a trader at Lance Zipper.
The market got a further boost following comments from an Iraqi official that Baghdad was willing to hold talks with the United States.
In an Iraqi television interview, Vice President Taha Yassin Ramadan said Iraq was "ready for dialogue with the American administration to build economic ties and cooperation" if it dropped its plans to invade his country.
News of the comments sent the markets higher, said John Licata, senior market strategist at BrokerageAmerica.
"You can't treat the overseas stories with a grain of salt," Licata said. "People feel more at ease that there may not be a war."
After falling into negative territory in early morning, stocks rebounded by the afternoon after investors concluded that a large explosion and fire aboard a fuel barge in New York was due to an accident, not a terrorist attack.
"The market sold off when (the barge) blew up in Staten Island, then retraced to where it was and rallied a bit higher," said Craig Cummins, a trader at Cantor Fitzgerald. "People were absolutely relieved that it was not a terrorist attack."
Two people were reported missing after the barge carrying gasoline exploded off New York's Staten Island. But officials in a city already jittery about security said it was an accident. U.S. Coast Guard officials said the facility was owned by Exxon Mobil, the world's largest oil company.
The second most actively traded stock on the New York Stock Exchange was SBC Communications (SBC), which ended down 57 cents, or 2.68 percent, at $20.73. On Thursday, shares of SBC Communications and other telephone companies fell after federal regulators kept in place rules that force carriers to provide rivals with low-priced access to their telephone networks.
Shares of Tupperware Corp (TUP) sank 12.9 percent, or $1.90, to $12.89, after the maker of food storage containers said severe winter weather would hurt its first-quarter sales.
Agilent Technologies Inc. (A) rose 85 cents, or 6.75 percent, to $13.45. The electronics and testing equipment maker on Friday reported a wider quarterly loss and said it would cut jobs, but noted that its second-quarter revenues would fall within analysts' expectations.
Oil prices, which have surged to 2-1/2-year highs due to worries about a possible U.S. war with Iraq, spiked again on the news of the New York fire. In New York, crude oil for April delivery rose 84 cents to settle at $35.58 a barrel.
On the Nasdaq, shares of BEA Systems (BEAS) fell 58 cents, or 5.17 percent, to $10.63 and were among the most actively traded issues. The software company reported higher quarterly earnings, but gave a cautious outlook.
InterCept Inc. (ICPT) was one of the Nasdaq's top percentage gainers, climbing 28 percent, or $1.55, to $7.08 a day after the software company said its 2003 earnings would surpass Wall Street estimates.
In economic news, the government said the Consumer Price Index -- the main U.S. inflation gauge -- advanced 0.3 percent last month, matching economists' estimates. But stocks barely reacted to the CPI news, which came a day after data showing that wholesale inflation had gained at the sharpest pace in 13 years, which helped drive stocks lower Thursday.
Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 22 to 9. On the Nasdaq, about 20 issues rose for every 12 that fell. Roughly 1.37 billion shares changed hands on the Big Board, while volume on the Nasdaq totaled roughly 1.32 billion.
The Russell 2000 index, which tracks smaller company stocks, rose 4.62, or 1.3 percent, to 364.36.
Overseas, Japan's Nikkei stock average finished 1.6 percent lower Friday. In Europe, France's CAC-40 gained 0.9 percent, Britain's FTSE 100 rose 1.1 percent and Germany's DAX index climbed 2.2 percent.
Reuters and the Associated Press contributed to this report.