Wall Street ended a volatile week with a turbulent session Friday, as investors cashed in options and futures contracts, sending the Dow Jones industrial average down 109 points. All three major stock indices saw a second straight week of losses.
Trading was feverish due to what’s known as "quadruple witching" — the simultaneous expiration of all index and equity options and futures contracts — and investors took the opportunity to adjust their portfolios and move into more defensive stocks. Technology shares, led by a sharp drop in semiconductor stocks, suffered the biggest declines.
“A lot of this weakness is due to options activity,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “And as you look ahead over the next few weeks, there’s a big tug of war between those who see positives in the market and those who don’t. When that happens, you can expect to drift a little lower.”
The Dow Jones industrial average plunged 109.18 points, or 1.1 percent, to 10,186.60, while broader stock indices also fell sharply.
The Standard & Poor’s 500-stock index fell 12.58 points, or 1.1 percent, to 1,109.74, and the Nasdaq composite index lost 21.97 points, or 1.1 percent, and closed at 1,940.47.
For the week, the Dow, which had risen over 206 points on Tuesday and Wednesday, lost 53.48 points, or 0.5 percent. The S&P 500 lost 1.0 percent for the week and the Nasdaq composite fell 2.2 percent.
The possible capture of Ayman al-Zawahri kept the market on edge, as traders were concerned that his apprehension might lead to retaliatory terrorist strikes.
Analysts said the next jobs report, due in two weeks, could boost shares somewhat, but most analysts agree there’s very little that will move the market much higher in the near future.
Stocks have been falling since mid-February on rising investor anxiety over the lack of job creation, a critical factor if the economic recovery is going to gain momentum.
The renewed terrorist activity, including last week’s bombing of trains in Madrid, has exacerbated the market’s uneasiness and raised the specter of a prolonged slump on Wall Street.
“This has been more of a lengthy correction than we might normally see,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. “It’s really been dragged out because of the heightened terrorist activity, high oil prices and low job growth. That keeps everybody on the sidelines.”
Even first-quarter earnings reports, due next month, may not be enough to shake the market out of the doldrums.
“I think this is going to be symptomatic of the kind of market we can expect for a while,” said Subodh Kumar, chief investment strategist for CIBC World Markets. “I think we’re still in a corrective phase, and I see us trading in this range through the first half of this year.”
Merger speculation and positive earnings did little to quell the market. Kmart Holding Corp. rose $1.07 to $38.13 after speculation that Sears Roebuck and Co. would make a bid for the discount retailer that recently emerged from bankruptcy protection. Sears fell $1.08 to $43.40.
Sprint Corp. slipped 1 cent to $17.65 after a media report noted the company is now free to be acquired and could actively pursue suitors as part of the deal with BellSouth Corp. that sent Gary Forsee to Sprint as chief executive a year ago. Britain’s Vodafone and Verizon Communications, up 10 cents at $37.47, are possible buyers.
Sporting apparel giant Nike Inc. reported a 61 percent jump in third-quarter earnings. Nike's share price rose 5 cents at $76.87.
Shares of software maker Adobe Systems Inc. jumped $3.58 to $39.85 as it doubled its income in the latest quarter, soundly beating Wall Street estimates.
Not all the earnings news was good, however. Computer network equipment maker 3Com Corp. slipped 37 cents to $6.69 after reporting a wider-than-expected loss for the quarter.
Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to 1.44 billion shares, compared to 1.36 billion at the same point Thursday.
Overseas, Japan’s Nikkei stock average lost 0.6 percent. In Europe, Britain’s FTSE 100 closed up 0.5 percent, France’s CAC-40 gained 0.7 percent for the session, and Germany’s DAX fell 0.2 percent.