Stocks Zig-Zag; Financials, Energy Gain

Stocks wavered in a tight range Friday as energy shares gained modestly while "quadruple witching" expiration of futures and options stirred up volatility. Gold soared to a new record.

The Dow Jones Industrial Average swayed between positive and negative territory after eking out a gain in the prior session. Both the S&P 500 and the Nasdaq also wavered.

Energy, materials and financials were among the day's leaders, while telecoms and health care dragged.

"Quadruple witching" is the simultaneous expiration of stock index futures, single stock futures, stock options and stock index options, an event that notoriously stirs a lot of volatility in the market.

The CBOE volatility index, widely considered the best gauge of fear in the market, fell near 24.

“Traders tend to stay aside [during quadruple witching] and as a result, there’s not a lot of liquidity,” said Doug Roberts, chief investment strategist at Channel Capital Research. “I wouldn’t really get aggressive right now, but I prefer the small-cap area.”

Gold soared to a new highabove $1,260 an ounce, while oil topped $77 a barrel.

Large-cap techs were mostly higher, with Cisco leading the Dow. And Apple rosenear the top of the Nasdaq pack after Susquehanna raised their price target on the iPhone maker to $335 from $325.

Investors juggled between the risk trade and playing it safe this week as utilities, technology and industrials are the week's winning sectors, while consumer discretionary and telecom were the laggards.

Caterpillar rose after the company reported dealer sales of heavy machinery rose 11 percentin the three months ending in May, snapping a nearly two-year decline, amid strong demand from Asia.

Citigroup shares rose as the bank is mulling a plan to raise $3 billionin private equity and hedge funds this year.

BP shares rose amid some relief after Congress grilled CEO Tony Hayward and there was some buzz about Hawyard being ousted and who might succeed him.

During the dramatic hearing on Thursday, lawmakers lambasted CEO Tony Hayward’s “lack of candor.” Hayward infuriated representatives with his evasive explanations regarding the spill, referring to multiple variations on the same them: That he had no direct involvement or knowledge of problems on the Deepwater Horizon, even though engineers lower down in BP's hierarchy had spoken about a "nightmare well."

Meanwhile, shares of Transocean jumped almost 10 percent, but the outperformance is mainly because the deepwater driller was added to the Swiss stock index at the close of trading in Europe today.

Investors did some bargain hunting throughout the energy sector, with the Philadelphia Stock Exchange oil-services index up more than 1 percent.

Brokerage Bernstein raised their price targets on oil giants Chevron , ConocoPhillips and Hess .

Meanwhile, shares of most homebuilders fell after Lennar , Pulte and D.R. Horton's price targets were cut by Credit Suisse.

US-traded shares of Toyota skidded after a senior executive said the company plans to slash car prices by 30 percentin the next three years. However, a corporate spokesperson denied the initiative.

Motorola shares fell after the handset maker said it will buy back most of its debtand pump its remaining cash into its struggling mobile-devices unit, which it plans to spin off.

Amylin Pharmaceuticals jumped as rival Roche said it would be delayed with its competing diabetes drug. JPMorgan upgraded its rating on Amylin to "overweight" from "neutral."

CVS Caremark and Walgreen rose after the companies settled a disputeover prescription-drug reimbursements.

Campbell Soup shares fell after the canned food manufacturer announced it is recalling 15 million pounds of SpaghettiOswith meatballs after a cooker malfunctioned at one of the company's plants, leaving the meat undercooked.

The euro held near a three-week high againstthe dollar, heading for its biggest weekly gain in more than a year as results of Spain's bond auctions eased worries about the European debt crisis.

All 27 EU members will publish detailed results of bank stress tests by July, and all of the bloc's members will also levy a tax on banks to pay for future financial crises and a financial transaction tax.

Next week, investors will be closely monitoring the two-day policy meeting of the Federal Open Market Committee, the rate decision-making body of the Fed, which starts Tuesday. The FOMC is set to release its rate decision Wednesday afternoon with an accompanying statement on their latest assessments on the economy and inflation.

The Fed is expected to keep its key policy rate—the federal-funds target rate, at record low near zero to revitalize the economy, a decision the central bank has maintained for more than a year.

On Tap For Next Week:

MONDAY: Feinberg speaks on executive compensation
TUESDAY: Existing home sales; Richmond Fed survey; 2-yr note auction; Flash Crash hearing; 2-day FOMC meeting starts; primary runoff elections; Earnings from Walgreen and Adobe
WEDNESDAY: Weekly mortgage apps; new home sales; weekly oil inventories; 5-yr note auction; FOMC interest rate decision; Galleon hearing; Earnings from Nike and Bed Bath & Beyond
THURSDAY: Durable goods orders; weekly jobless claims; 7-yr note auction; iPhone 4 on Sale; Yahoo shareholders meeting; Earnings from Lennar, Oracle and Research In Motion
FRIDAY: GDP; corporate profits; consumer sentiment; XTO shareholders meeting on Exxon buyout

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