Updated from 4:04 p.m. ESTStocks closed sharply lower Friday, with all the major indices losing over 1% amid a lack of resolution in the hunt for terrorists and a wave of options and futures expirations. Semiconductor stocks led the way lower. The Dow lost 109.18 points, or 1.06%, to close at 10,186.60; the S&P 500 was off 12.59 points, or 1.12%, to 1109.73; and the Nasdaq closed down 21.97 points, or 1.12%, to 1940.47. Volume on the New York Stock Exchange was over 1.4 billion shares, while over 1.6 billion shares changed hands on the Nasdaq. Decliners outpaced advancers by about 3 to 2 on both exchanges. In the wake of a devastating terrorist attack in Spain, the three indices suffered their second week of losses in a row. The Dow lost 0.5%, the S&P shed close to 1% and the Nasdaq was down 2.2%. "With options expiration, you often get a little unwinding sometimes at the close, and I think that's what we're seeing here," said Peter Dunay, chief market strategist at Wall Street Access. "The trend has been to pull back, and we keep getting these bounces on light volume. And then, when we add expirations to this stuff, it exacerbates the moves a little bit. So it's really unwinding here. You can feel it in the last hour." Thousands of Pakistani army reinforcements are reportedly joining a major offensive Friday in tribal border villages where al Qaeda's No. 2 leader, Ayman al Zawahri, is thought to be surrounded. Afghan authorities reported the arrests of "semi-senior" terrorist leaders on their side of the border. Dunay thinks the market will stay in a corrective mode until earnings season gives investors something to bet on. "Ahead of that, people are being cautious; they're just looking for a floor," he said. "The terrorism news out of Pakistan might be positive today, but at the same time, it's still a reminder of the terrorist threat element out there that creates an overall mood of uncertainty in the markets." Meanwhile, Friday was a so-called "quadruple-witching" options and futures expiration, an event that sometimes creates volatility in the stock market as traders unwind existing hedges and roll into new ones and it proved to be the case today. Paul Mendelsohn, chief investment strategist at Windham Financial Services, said that traders are confused about what side they should take in this market. "We've had all these scares and bad news, and there's also some positive news out there, so we've got this scale that's balancing back and forth as we come into the options and futures expiration," he said. "It's been very bizarre. I think that with the possibility of this al Qaeda leader being captured in Pakistan, traders wouldn't want to be too short going into the weekend." "The news and the rumors, hitting at this point in time, it's uncanny," Mendelsohn added. "I just think we're going to see a lot of volatility today. It could be like a ping-pong match." The 10-year Treasury note traded down 8/32 to yield 3.78%, while gold edged up. Crude oil traded up 15 cents on the Nymex to $38.08. The dollar was weaker against the yen and euro.