NEW YORK – Stocks closed lower Friday as markets followed what has become a pattern at the sputtering end of this fourth-quarter rally: Early gains narrow through the day's trading and occasionally turn to losses. The major indexes finished the week mixed.
Friday was one of the year's four "quadruple-witching days," so called because four kinds of options contracts expire. Historically, the days have meant higher than usual volatility and volume as investors cash in or renew their contracts; in 10 of the last 13 such days, the Dow Jones industrial average has closed higher, according to the "Stock Trader's Almanac."
Friday became one of the rare down "witching" days, with the Dow frittering away early, modest advances to turn negative.
Tech stocks drooped, perhaps on recent middling results from the sector's big names, such as Oracle Corp. (ORCL), which look worse compared to the recent sunny outlooks from industrial companies such as General Electric Co. (GE) and Honeywell International Inc.(HON).
Still, by afternoon, all the day's gains were gone. "It looks like the rally we saw from the October bottom until late November is sort of stalled," said Joseph Sunderman, director of trading at Schaeffer's Investment Research in Cincinnati.
The Dow Jones industrial average fell 6.08, or 0.06 percent, to 10,875.59. Broader stock indicators also fell. The Standard & Poor's 500 index dropped 3.62, or 0.28 percent, to 1,267.32, and the Nasdaq composite index declined 8.15, or 0.36 percent, to 2,252.48.
Crude oil futures fell. A barrel of light crude settled at $58, down $1.93 on the New York Mercantile Exchange.
Bonds prices rose, with the yield on the 10-year Treasury note falling to 4.44 percent from 4.47 percent late Thursday. The U.S. dollar was mixed against other major currencies. Gold prices declined.
In economic news, America's deficit in the broadest measure of international trade showed a slight improvement in the July-September quarter, although it was still at the third-highest level in history. The current account deficit includes not only sales of merchandise and services but also investment flows and foreign aid. The current account deficit must be financed by convincing foreigners to hold more dollars, which they invest in U.S. stocks, bonds and Treasury securities.
This is part of a string of economic reports that have come in "not too hot, not too cold," said John P. Waterman, chief investment officer at Rittenhouse Asset Management.
"We feel a little bad news on the economy is good news for the market," because it means the Federal Reserve will stop raising short-term interest rates sooner, he said.
The market, however, struggled through another week without notable gains, as investors continued to consolidate their holdings despite generally strong earnings and economic reports. For the week, the Dow rose 0.9 percent and the S&P gained 0.63 percent, while the technology and small-cap selloff pushed the Nasdaq 0.19 percent lower.
In company news, Adobe Systems Inc. (ADBE) climbed $3.89, or 11 percent, to $38.82 after the company, which makes software such as Acrobat for creating digital documents, posted higher fourth-quarter earnings and gave an upbeat fiscal 2006 outlook.
Johnson & Johnson (JNJ) rose 70 cents to $60.86 after it agreed to buy Animas Corp. for about $518 million, giving J&J access to the market for insulin delivery pumps. J&J said it would pay $24.50 for each Animas share, a 35 percent premium over the stock's Thursday close. Animas surged 32 percent, or $5.83, to $24.03.
Oracle fell 14 cents to $12.69 after the business software company's earnings dipped 2 percent, depressed by an accounting charge that was largely due to its $11.1 billion takeover of PeopleSoft Inc.
Pier 1 Imports Inc. (PIR), slid 61 cents, or 6.2 percent, to $9.19, a new 52-week low. The company continued a fall that began Thursday, when the home goods retailer said it would abandon its crafty wicker furniture in favor of goods that are sleeker and more modern looking.
Declining issues narrowly led advancers on the New York Stock Exchange, where final consolidated volume was 2.87 billion shares, up from 2.21 billion shares Thursday.
The Russell 2000 index of smaller companies fell 1.65, or 0.24 percent, to 683.09.
Overseas, Japan's Nikkei stock average fell 0.53 percent. Britain's FTSE 100 rose 0.66 percent, Germany's DAX index gained 1.09 percent, and France's CAC-40 increased 0.67 percent.