Updated from 2:50 p.m. EST

Stocks closed sharply lower Friday, as worries about high oil prices and the slumping dollar were exacerbated by options-related volatility, with two of the three major indices posting their biggest single-day point declines in two months.

The

Dow

fell 115.64 points, or 1.1%, to 10,456.91, leaving it just 3 points away from negative territory for the year; the

S&P 500

was off 13.21 points, or 1.1%, at 1170.34, having hit a three-year high a week ago; while the

Nasdaq

shed 33.65 points, or 1.6%, to 2070.63, after closing above 2100 Thursday for the first time since late January.

All of the major indices closed lower for the week, snapping a three-week winning streak in what's been a hearty postelection rally. The Dow shed about 0.9%, the S&P 500 lost 0.8%, and the Nasdaq ended the week 0.6% lower.

Volume Friday slowed from the previus session; on the

NYSE

1.53 billion shares traded, while 2.03 billion shares changed hands on the Nasdaq. Decliners beat advancers by more than a 2-to-1 margin on both exchanges.

In other markets, the 10-year Treasury note was down 21/32 in price to yield 4.20%, while the dollar resumed its slide against the yen and euro. The dollar hit a new record low of 1.3047 vs. the euro Thursday.

The U.S. currency slid further after

Federal Reserve

Chairman Alan Greenspan, addressing a conference on the euro in Frankfurt, said that given the ballooning current account deficit, a "diminished appetite for adding to dollar balances must occur at some point."

Oil surged on reports that stormy weather had prevented tankers from loading oil at Iraq's southern export terminal complex, and speculation that OPEC was considering a production cut to prevent any freefall in prices; the December futures contract closed up $2.22 to $48.44.

Friday is the so-called "triple-witching" expiration of options and futures contracts, an event that often amplifies movements in the stock market as traders roll bets into another month's strike price.

Adolfo Rueda, senior technical analyst with Shields & Co., said that while expiration is a factor, the main catalyst working on equities now is interest rates.

"The bonds and the notes reversed big from yesterday's action, which can affect everything," Rueda said. "Homebuilders are reacting to that, as well as utilities. People know these long-term rates can't stay low forever, so everyone's a little touchy about any kind of shift."

Tech stocks were being pressured by selling in semiconductor shares, reflected in a 3.1% decline in the Philadelphia Semiconductor Index. Chip-equipment makers including

Applied Materials

(AMAT) - Get Report

,

KLA-Tencor

(KLAC) - Get Report

and

Teradyne

(TER) - Get Report

all had 2.5%-plus declines after Goldman Sachs downgraded the sector Friday morning.

In corporate news Friday,

Genentech

(DNA)

and

OSI Pharmaceuticals

(OSIP)

received clearance from the Food and Drug Administration for their Tarceva treatment for non-small-cell lung cancer. Tarceva is a potential billion-dollar-a-year blockbuster that is expected to compete with Iressa, which is sold by

AstraZeneca

(AZN) - Get Report

. OSI Pharmaceuticals lost $6.09, or 9.5%, to $58.16.

Disney

(DIS) - Get Report

late Thursday said fourth-quarter earnings were $516 million, or 25 cents a share, up from $415 million, or 20 cents a share, last year. Adjusted earnings of 19 cents a share were in line with estimates, as was Disney's revenue, which came in at $7.54 billion. The company's ABC television networks and its theme parks drove the quarter. Shares rose 29 cents, or 1.1%, to $26.66.

Several drugmakers fell following yesterday's

Merck

(MRK) - Get Report

hearing on Capitol Hill. FDA researcher David Graham, in assessing the FDA's response to problems with Merck's Vioxx, said at least five other drugs currently on the market have enough safety issues that more clinical tests should be carried out.

Graham named the obesity drug Meridia, made by

Abbott Laboratories

(ABT) - Get Report

; the cholesterol drug Crestor, made by AstraZeneca; the arthritis drug Bextra, made by

Pfizer

(PFE) - Get Report

; Accutane, a treatment for acne, made by Genentech majority-owner

Roche

; and Serevent, an asthma treatment from

GlaxoSmithKline

(GSK) - Get Report

.

Sirius Satellite

(SIRI) - Get Report

saw a huge rally in its shares Thursday night after the company announced the hiring of former

Viacom

(VIAB) - Get Report

executive Mel Karmazin as CEO. The news comes just six weeks after the company lured New York shock jock Howard Stern away from Viacom's Infinity radio business in a $500 million deal. Sirius Satellite closed up 45 cents, or 9.5%, to $5.17.

Amazon.com

(AMZN) - Get Report

fell in premarket trading after Bank of America initiated coverage with a sell. The brokerage said the online giant should be valued more like a retailer than an Internet company, and advised selling it because its customers tend to spend less than customers of other stores. BofA set a $26 price target. Amazon fell $1.82, or 4.5%, to $38.55.

Overseas markets were mostly lower, with London's FTSE 100 recently down 0.9% to 4764 and Germany's Xetra DAX shedding 0.7% to 4179. In Asia, Japan's Nikkei was unchanged at 11,082, while Hong Kong's Hang Seng fell 0.1% to 13,788.