Stocks Survive Oil Slick - TheStreet

Updated from 4:05 p.m. EST

Stocks closed mixed amid record oil prices, rising bond yields and disappointing economic data on an options-expiration Friday that caused some big price swings in the last minutes of trading.

The

Dow

added 3.32 points, or 0.03%, to 10,629.67, having been down some 60 points at one point in the session, while the

S&P 500

lost 0.56 points to 1189.65. The

Nasdaq

, however, fell 8.63 points, or 0.43%, to 2007.79 -- breaching its 2005 low touched on Jan. 24 -- and briefly traded as low as 1999.98. The tech index last closed below 2000 on Nov. 2, right before the big end-of-year rally.

For the week, all of the markets ended in the red. The Dow lost 1.62%, the S&P 500 gave back 1.42%, and the Nasdaq shed 2.11%. It was the second week of losses since the Dow and S&P 500 touched near four-year highs March 4.

Volume on the

NYSE

was 2.34 billion, much heavier than usual, with decliners beating advancers by a 10-to-6 margin. Volume on the Nasdaq was not quite as inflated, as 2.09 billion shares turned over. Decliners beat advancers by a ratio of 9 to 6.

In other markets, the 10-year Treasury note ended down 9/32 in price to yield 4.51%, while the dollar was stronger against the yen and euro.

The April crude contract closed up 32 cents at $56.72, a new record high, in regular Nymex trading. On Thursday, futures went as high as $57.50 before reversing late in the session. The price of oil has been moving in nearly precise inverse proportion to stocks all week.

"We are at very oversold levels here on a short-term basis," said John Hughes, equity strategist at Shields & Co. "The market's behavior is unnerving in the short term, nothing seems to be working, money continues to leave stocks and go into commodities."

Friday's session saw higher-than-normal volatility and trading volume for two reasons. One was the monthly expiration of options and futures known as "quadruple witching," which sometimes sows chaos as traders roll from one month's position to another.

The other was a much-anticipated reweighting of the S&P 500. A company's proportion in the index will now be based on shares available for trading rather than total shares outstanding. Though mutual funds that mirror the index have known about the reweighting for some time, some stocks likely saw added buying and selling pressure as managers adjusted positions to the new proportions.

"There isn't a catalyst that will push the market higher right now," said Jay Suskind, head of institutional trading at Ryan Beck & Co. "Oil is creeping back up, the bond yield is back up, and you have the witching. It will be tough to close to the upside."

In economic news, import prices rose 0.8% in February, with the bulk of the increase coming from higher petroleum prices. Export prices were unchanged. Elsewhere, the University of Michigan's consumer sentiment index fell to 92.9 in March vs. 94.1 in February. An increase to 94.8 was expected.

In corporate news,

RadioShack

(RSH)

announced Friday that its first-quarter earnings will fall short of its old forecast of 39 cents to 41 cents. The company believes first-quarter EPS is more likely to be 30 cents to 34 cents.

RadioShack also said it is unlikely to achieve its previously stated 2005 full-year guidance of $2.34 to $2.40 a share. The stock closed down $3.12, or 12%, to $24.59.

palmOne

(PLMO)

announced third-quarter earnings of $10.6 million, or 21 cents a share, matching analyst expectations. But the company cut its fourth-quarter guidance, saying it expects to earn 25 cents to 32 cents a share, way below analyst expectations of 50 cents to 60 cents a share. The stock finished down $1.90, or 8%, to $22.15.

Nike

(NKE) - Get Report

announced a quarterly profit of $273.4 million, or $1.01 a share, up from $200.3 million, or 74 cents a share, a year ago. Wall Street was expecting 99 cents a share. Shares of Nike closed down 1.29 cents, or 1.5%, to $85.54.

In brokerage news, Morgan Stanley upgraded

Apple Computer

(AAPL) - Get Report

to overweight from equal weight, saying the conversion rate to Mac computers within the company's iPod customer base is roughly double what the market expects. The stock closed up 71 cents, or 0.7%, to $42.96.

A.G. Edwards upgraded

Lincoln National

(LNC) - Get Report

to buy from hold, stating that shares are now attractively priced and that shares can deliver a solid combination of growth and current income. The stock closed up 32 cents, or 1.7%, to $46.12.

A software takeover battle attracted more attention today.

Oracle

(ORCL) - Get Report

last night announced that it was raising its buyout offer for

Retek

( RETK) to $11.25 a share, or $631.4 million. Rival

SAP

(SAP) - Get Report

earlier Thursday upped its offer to $11 a share from $8.50. Oracle shares finished down 62 cents, or 5%, to $12.54, while Retek's closed down 18 cents, or 1.5%, to $11.47. SAP closed down 12 cents, or 0.3%, to $40.13

"Heading into the Federal Open Market Committee (FOMC) meeting next week the market will probably remain range-bound," said Robert Pavlik, portfolio manager at Oaktree Asset Management. "We have many economic indicators coming out next week, but people will be looking for what kind of statement is made in the FOMC announcement, will they keep raising rates at a 'measured pace.' Right now we all know what is keeping the market down; it is still oil and interest rates, and until we have a reason to step in and buy, the market will remain in a downtrend."

Overseas markets closed mostly higher. London's FTSE 100 ended flat at 4923, and Germany's Xetra DAX finished up 0.3% to 4327. In Asia, Japan's Nikkei rose 0.9% overnight to 11,880, and Hong Kong's Hang Seng added 0.1% to 13,828.