Stocks Trade Off Highs Before Close

Stocks traded off the highs of the day before the close, amid a still uncertain global environment rocked by uncertainty in the Middle East and Japan, although bank stocks got a lift as institutions began announcing dividend increases.

The Dow Jones Industrial Average rose more than 60 points, after rising more than 150 earlier in the session, and after climbing back from the lows of the yearin Thursday's session.

Among Dow components, JPMorgan , Caterpillar and American Express gained, while Travelers slipped.

The S&P 500 and the Nasdaq also rose. The CBOE Volatility Index, widely considered the best gauge of fear in the market, sank more than 6 percent to below 25. The VIX had been as high as 30 earlier in the week as the Japan nuclear crisis unfolded.

Among key S&P 500 sectors, financials,materials and industrials rose, while consumer discretionary fell.

The market continued to be volatile on Friday as investors kept abreast of the events unfolding in Libya as well as Japan, where officials were still struggling to contain a nuclear disaster.

"There's lots of back-and-forth movement as investors try to grasp the situation going on in the world right now," said Paul Brigandi, vice president of trading at Direxion Funds.

Investors stepped in on Thursday to snap up bargains created by a 5 percent downdraft in the S&P 500, but today's rally has stalled a bit because there's "still a lot of uncertainty out there," Brigandi said.

"Heading into the weekend, a lot of news could come out," he added. "You won’t see too much conviction."

That lack of conviction may have contributed to a late afternoon slide in stocks, as investors were reluctant to hold positions ahead of the weekend with so many questions remaining about Japan's situation and the Middle East, said Joe Saluzzi, co-manager of trading at Themis Trading.

"And nowadays, the way things trade, people want to be flat at the end of the day," Saluzzi said.

And "the odds of getting bad news over the weekend are higher than getting good news," said Uri Landesman, president of Platinum Partners.

Technically, Landesman said he had been waiting for stocks to fall. The loss in the S&P 500 this week, from a high of 1,344 on Feb. 18, to around 1,278 today, isn't enough.

"I still think we test 1230 on this move," Landesman said. "Then I think, barring disastrous news, (traders) will give it at least a shot at holding it there, and maybe rallying off of that."

Stocks got a boost at the beginning after the session after Libya announced it was declaring a ceasefireto protect civilians in the wake of UN Resolution reached late Thursday to create a no-fly zone over the country, although there were reports that fighting was continuing.

The market was already poised to move higher in the wake of a decision by the group of seven largest industrialized nations (G7) to intervene in the currency marketto restrain a soaring yen in the wake of last week’s devastating earthquake in Japan.

Middle East Turmoil
Middle East Turmoil

Oil prices fell as traders kept their eye on the events in Libya. London Brent crude traded below $114 barrel, while U.S. light sweet crude traded around $101 a barrel.

Energy stocks weakened as oil prices fell. Range Resources , Consol Energy , and Chesapeake Energy led decliners.

In the currency markets, the yen weakened just minutes after the announcement on joint intervention, but investors were still trying to figure outwhether the move will be successful in the long run. Japanese stocks rose on relief that exports will not be hampered by a strong Japanese currency.

Banks got a lift as the Federal Reserve cited "significant improvment" in recently-completed stress tests of 19 of the biggest banks.

Goldman Sachs shares rose after announcing that the Federal Reserve has no problem with its plans to redeem the full number of preferred stock shares held by Berkshire Hathaway .

JPMorgan Chase's shares rose after it announced it would increase its dividend to 25 cents a share from 5 cents a share. Wells Fargo also jumped after the bank's board agreed to a special dividend increase of 7 cents a share in the fiscal first quarter, up from 5 cents a share previously. The board also authorized a $200 million share buyback.

BB&T was the first to announce it would increase its dividend. The bank will boost the dividend by 6.7 percent to 16 cents a share, and will add 1 cent to the dividend in the fiscal second quarter.

Also, SunTrust said it began a $1 billion stock buyback, part of its effort to buyback the preferred stock issued to the U.S. Treasury under the Troubled Asset Relief Program, while PNC said it will consider a dividend boost at its April 7 meeting.

And US Bancorp raised its quarterly dividend to 12-and-a-half cents a share from 5 cents, and said it would repurchase 50 million shares.

Other banks with dividend announcement included Bank of New York Mellon , State Street Bank , and KeyCorp . KeyCorp also plans to repay Tarp funds.

Today is quadruple witching, when contracts on stock index futures, stock index options, stock equity options, and single stock futures expire. This happens once every quarter, on the third Friday of March, June, September and December.

Volatility is common in the market in the week before quadruple witching as trades are settled, although geopolitical events have played a bigger role this week, the settling and rolling over of trades has led to some additional volatlity, Brigandi at Direxion Funds said.

IBM continued to trade higher even after reports that the Securities and Exchange Commission charged the tech giant with bribing government officials in South Korea and China, according to Dow Jones.

Meanwhile a host of companies including Honda , Sony and General Motors were expected to suffer from supply chain disruptionas plants remain closed following the disaster last week.

Cisco shares gained after the company said it would pay a cash dividendto shareholders for the first time. The networking giant will pay shareholders 6 cents a share on April 20.

In M&A news, Quest Diagnostics said it will buy rival Celera for about $657 million in cash. Celera is engaged in testing genes.

Nike led consumer discretionary stocks lower after the athletic-wear maker reported a disappointing profit hit by rising oil and cotton prices. The company's shares sank more than 9 percent.

Treasurys rallied much of the week, driven by investors seeking a safe haven. The 10-year Treasury rose 1 1/32 points this week to 102 30/32, pushing the yield to 3.27 percent. Today the 10-year dropped 8/32 points.

Shares in Europe closed higherafter news of the Libyan ceasefire.

On Tap Next Week:

MONDAY: Obama in Latin America; Fed Chairman Bernanke, FDIC Chair Bair at commercial bankers conference; existing home sales; before-the-bell earnings from Tiffany.
TUESDAY: CTIA Wireless Convention; before-the-bell earnings from Walgreens; after-the-bell earnings from Adobe.
WEDNESDAY: Caterpillar analyst meeting; annual meetings for Disney, HP and Starbucks; mortgage applications, new home sales, oil inventories; before-the-bell earnings from General Mills.
THURSDAY: EU summit; durable goods, jobless claims, natural gas inventories, 10-year TIPS auction, money supply; before-the-bell earnings from Best Buy and ConAgra; after-the-bell earnings from Oracle, Research in Motion.
FRIDAY: USDA food prices outlook; GDP revision, corporate profits, and consumer sentiment.

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