NEW YORK – Stocks ended mixed Friday as the expiration of options and futures contracts increased trading volatility and amid speculations, later downplayed by authorities, over a possible terror threat to New York City.
The Dow Jones industrial average (search) ended up 30.14 points, or 0.29 percent, at 10,278.22, its highest close since May 17, 2002. The Standard & Poor's 500 Index (search) inched down just 0.52 of a point, or 0.05 percent, to 1,088.66. The technology-laden Nasdaq Composite Index (search) shed 5.16 points, or 0.26 percent, to 1,951.02, based on the latest available data.
Friday marked the fourth straight up week for both the Dow and the S&P, and the second straight week of gains for the Nasdaq. For the week, the S&P added 1.4 percent, the Dow gained 2.4 percent, and the Nasdaq edged up 0.10 percent.
For the week, the Dow ended up 2.35 percent and the S&P 500 rose 1.35 percent, notching their fourth straight week of gains. The Nasdaq ended up 0.10 percent for the week.
The expiration of stock options, index options, index futures and single-stock futures, know as "Quadruple witching," sparked spikes and dips in the market, as investors either exercised their positions or rolled them forward at the last minute.
"It's very, very difficult to read any type of market direction on days like today because it is just a huge program day and there's just a lot of churning in the marketplace right now," said David Memmott, head of listed block trading at Morgan Stanley.
The major market gauges recovered from earlier lows, after traders brushed off an early afternoon report saying that U.S. authorities were reviewing a possible terror threat to New York City.
ABC News had reported on its Web site that U.S. intelligence sources received information about a "credible and imminent threat" to New York City, possibly by a suicide bomber. Later, ABC said U.S. authorities were evaluating a surge of information related to "possible terrorist threats" to several U.S. cities, including Los Angeles and Washington, D.C.
"The reaction is very limited, and in the view of most traders, is a total non-event," said Keith Keenan, vice president of institutional trading at brokerage Wall Street Access. "Most traders have become numb to it and look to buy any kind of sell-off related to that."
A U.S. intelligence official told Reuters that "we are in the process of trying to determine its credibility and trying to corroborate it," referring to an unspecified threat to New York. Separately, the New York Police Department said in a statement that it had no credible intelligence of a terrorist threat to New York.
Topping the list of the Dow's best-performing stocks was Eastman Kodak (EK), the largest U.S. maker of photographic film that recently said it was shifting its focus to digital printing and away from traditional firm. Kodak rose 99 cents, or 4.2 percent, to $24.56.
Alcoa Inc. (AA) helped lift the Dow, after Morgan Stanley raised its earnings forecasts and rating on the world's largest aluminum producer to "overweight" from "equal-weight." Shares of Alcoa rose 92 cents, or 2.5 percent, to $37.30, and were the Dow's second-biggest percentage gainer.
But the Dow's late afternoon gains were curbed by McDonald's Corp. (MCD), the blue-chip average's biggest percentage loser. McDonald's stock fell after the U.S. chain's Japanese unit widened its loss forecast this year for canceling a consulting contract with the founder of McDonald's Japan. Shares of McDonald's, which owns a 50 percent stake in the Japanese venture, slid 51 cents, or 2.1 percent, to $24.30.
Equifax Inc. (EFX) also fell sharply, on news that it expects to take a fourth-quarter charge of about $23 million for asset writedowns and losses at a unit affected by new laws against unwanted spam e-mail. Shares of Equifax, the largest U.S. credit reporting company, dropped 68 cents, or 2.8 percent, to $23.87.
On the Nasdaq, Red Hat Inc. (RHAT) shares rallied to a new 2003 high, a day after it posted strong quarterly earnings and sales. Shares of Red Hat, a leading distributor of the free Linux software that rivals Microsoft Corp.'s (MSFT) Windows operating system, jumped $3.21, or 22.5 percent, to $17.49. Earlier, Red Hat hit $17.59, a fresh 52-week high.
Among the forces of gravity pulling on the Nasdaq, though, were the shares of Paychex (PAYX), which fell after Wachovia Securities said Friday it cut its rating on the payroll services company to "market perform" from "outperform." Paychex shares lost $2.46, or 6.3 percent, to $36.52.
The Russell 2000 index, which tracks smaller company stocks, slipped 0.02 to 546.88.
Overseas, Japan's Nikkei stock average finished 1.8 percent higher. In Europe, Britain's FTSE 100 increased 0.3 percent, France's CAC-40 slipped 0.03 percent, and Germany's DAX index gained 0.7 percent.
Reuters and the Associated Press contributed to this report.