US blue chip stocks ended a touch ahead on Friday but the Nasdaq closed at a 2005 low, capping a choppy session as the long-awaited rebalancing of the Standard & Poor's index was combined with quarterly options expiration. Meanwhile, investors worried about oil prices as crude nudged higher, while declines in telecom shares weighed on the Nasdaq after RadioShack Corp warned of slowing cell-phone sales.
Trading was choppy and volume heavy during the session as the adjustment of the Standard & Poor's indexes coincided with the quarterly expiration of March futures and options contracts - known as quadruple witching.
During the session, the Nasdaq briefly fell below the psychologically important 2,000 level for the first time in 2005. It closed at its lowest level since November 2004.
But stocks rallied off their session lows late in the day, pulling the Dow and the S&P 500 back to a position of little change at the close.
The Dow Jones industrial average was up 3.32 points, or 0.03 percent, to finish at 10,629.67, after falling as low as 10,557.04. The Standard & Poor's 500 Index was down just 0.56 of a point, or 0.05 percent, to end at 1,189.65, after falling as low as 1,182.78. The technology-laced Nasdaq Composite Index was down 8.63 points, or 0.43 percent, to close at 2,007.79, after falling as low as 1,999.98.
Trading was heavy, with 2.34 billion shares changing hands on the New York Stock Exchange, way above the 1.46 billion daily average for last year.
The last time that volume on the NYSE exceeded 2 billion shares was December 2004, making Friday the busiest volume day of 2005.
About 2.11 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
Decliners outnumbered advancers on the New York Stock Exchange by nearly 2 to 1 and by 3 to 2 on Nasdaq.
"Oil is still being a bit problematic," said Evan Olsen, head of equity trading at Stephens Inc "I think we're starting to come to terms with $50 oil, but that doesn't mean that it's not troubling.
"On top of that, we've seen some effect of the witching. We really felt it on the opening and a couple of times during the day and also at the close. There's rebalancing going on and witching all in one."
Four types of March futures and options contracts expired or settled on Friday, a quarterly event that usually stirs high volume as investors adjust or exercise their derivative positions.
An unusual event also coincided with the quadruple witching. The S&P is making adjustments to its benchmark S&P 500 affiliated indexes to full float in 2005. Half of that adjustment was set to take place after the market closed on Friday. That event increased trading in some of the stocks involved as fund managers rebalanced their portfolios.
The adjustment means that only the shares available to investors are reflected in the index - not shares held by a control group, founding family or government.
Trade in Wal-Mart Stores Inc which has a large amount of stock held by insiders, including the founding Walton family, was at its highest volume in more than two decades. Wal-Mart, also a Dow component, fell 88 cents, or 1.7 percent, to $51.45.
Among the tech names being rebalanced in the S&P index are Microsoft Corp, down 23 cents, or 0.9 percent, at $24.31, and Oracle Corp, down 62 cents, or 4.7 percent, at $12.54.
Investors were wary of oil prices. NYMEX crude oil futures ended higher, extending a scorching rally for a sixth week in a row amid a record run that lifted prices above $57 this week. April delivery crude rose 32 cents to settle at $56.72 a barrel. That fanned investors' fears that high energy prices will cut into corporate profits.
Interest rates were also a concern before the Federal Reserve's rate-setting meeting next week. The fed funds rate is expected to be lifted a quarter point to 2.75 percent.
General Motors Corp recovered from earlier losses to rise 27 cents, or almost 1 percent, to $28.62 - two days after the world's largest carmaker warned its 2005 earnings will be as much as 80 percent below its previous forecast due to slumping North American auto sales.
"There are so many factors out there - GM, the threat of rates going up, and oil, which is almost a self-fulfilling prophecy where it almost becomes a psychological lid on the market," said Mark Bryant, senior vice president at Brean Murray. "You're asking the market to fight against a lot of negative factors."
Meanwhile, RadioShack dropped 11 percent, or $3.11, to $24.60 after the electronics retailer cut its earnings forecast, citing weak battery and cell-phone sales.
The warning had implications for telecommunications shares. Sprint Corp was off 16 cents at $22.80 and Verizon Communications Inc was down 6 cents at $35.15. Qualcomm Inc fell 41 cents to $36.47.
Apple Computer Inc offered some support. Apple rose 1.7 percent, or 71 cents, to $42.96 after Morgan Stanley raised its rating on the shares to "overweight" from "equal weight.