NEW YORK (CNNMoney.com) -
Stocks ended lower Friday despite a steep drop in oil prices that left investors wondering whether the market's recent rally was over, at least for now.
The Dow Jones industrial average (Charts) ended just below breakeven, while the S&P 500 index (Charts) fell 0.3 percent and the Nasdaq composite (Charts) fell 0.4 percent after rising as much as 0.5 percent early in the session.
The so-called quadruple witching expirations of stock index futures and options and individual stock futures and options, had some investors on edge Friday. The witching period, which occurs once a quarter, is an event that can cause wider swings in the market.
The nervousness over stocks made bonds look relatively safe in comparison.
Treasury prices gained, lowering the yield on the 10-year note to 4.44 percent from 4.47 percent late Thursday, near its lowest level this month. Bond prices and yields move in opposite directions.
The dollar fell versus the euro and yen.
Light, sweet crude oil for January delivery fell $1.93 to $58.06 a barrel on the New York Mercantile Exchange. The significant drop helped calm fears that high oil prices would hurt corporate profits and consumer spending.
The slide in crude oil prices also heavily weighed on energy stocks including Exxon Mobil (down $1.43 to $58.06, Research) and Chevron (down $1.51 to $57.51, Research).
COMEX gold for February delivery was down 70 cents to $505.90 an ounce.
The Nasdaq was lower for the third-straight week. The Dow and S&P both managed to end higher for the week after falling last week, following the market's powerful November rally. For the year, the Dow, S&P and Nasdaq are all higher.
Despite the recent sluggish performance on Wall Street, many investors are still anticipating a Santa Claus rally in the last two weeks of the year.
Stocks ping-ponged all morning and through the early afternoon in options-related volatility, by late afternoon most of the day's gains had evaporated.
The Nasdaq got an early boost after Credit Suisse First Boston said it was bullish on chipmakers and software stocks going into 2006.
Shares of Adobe Systems (up $3.89 to $38.82, Research) surged over 11 percent on the Nasdaq after the design software maker said its fourth-quarter profit jumped 38 percent, beating expectations.
But SFBC International (down $2.64 to $13.14, Research), which conducts tests of experimental drugs for pharmaceutical companies, cut its 2005 profit outlook and gave a 2006 outlook that disappointed some analysts, sending shares plummeting almost 20 percent.
Dow component Caterpillar (up $0.93 to $59.64, Research) got a boost after the company reported higher sales of its machines in September, October and November. The stock rose 1.6 percent and was the Dow's biggest gainer in the session.
Altria (up $0.70 to $77.32, Research) rose for a second session after Thursday's major victory in a statewide class-action case over "Marlboro Lights" and "Cambridge Lights" cigarettes.
United Technologies (up $0.43 to $58.03, Research) also helped the Dow after CIBC raised its rating on the stock to "sector outperformer" from "sector performer," citing stronger confidence in 2006 growth, sending the stock up nearly 1 percent.
But General Motors (down $0.24 to $21.89, Research) dipped into negative territory even though Chief Executive Rick Wagoner said the automaker should see improved revenue in 2006, driven by its new line of full-sized sport utility vehicles and trucks. (Is GM a buy? Click here for more.)
Among other stock movers, shares of RadioShack (down $1.53 to $22.19, Research) sank over 6 percent after the electronics retailer said it likely will fall short of its fiscal 2005 earnings forecast as sales of wireless products and high-margin items have been weaker than expected.
Martha Stewart Living Omnimedia (down $0.47 to $19.03, Research) shares fell almost 3 percent after the company said its chief financial and administrative officer James Follo plans to resign in March.
Oracle (down $0.14 to $12.69, Research) stock ended down 1 percent after falling more than 3 percent during the session after the software maker posted a lower second-quarter profit.
On the merger front, Johnson & Johnson (up $0.70 to $60.86, Research) said it agreed to acquire Animas (up $5.83 to $24.03, Research), a maker of insulin delivery systems, for $518 million in cash, sending the stock up over 1 percent.
Shares of Albertson's (up $0.34 to $24.33, Research) rose over 1 percent after a report that the grocery chain is close to being purchased by Cerberus Capital, Kimco Realty (down $0.05 to $32.68, Research) and grocery chain Supervalu (down $0.10 to $32.05, Research) for about $9.6 billion, or $26 a share.
CNNMoney.com parent company Time Warner (Research) is reportedly in exclusive talks with Google (Research) about the search engine company broadening a partnership with Time Warner's AOL online unit. Shares of Time Warner and Google were both up over 1 percent in afternoon trade.
Market breadth was negative. On the New York Stock Exchange, losers barely beat winners on volume of 2.1 billion shares. On the Nasdaq, decliners edged out advancers as 2.4 billion shares changed hands.
In economic news, the current account deficit narrowed in the third quarter to $195.8 billion. (Full story.) Reports on housing starts, building permits and wholesale prices are all slated for early next week.