By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks erased their gains on
Friday, as steep losses for Oracle Corp. weighed on two of the
benchmark stock indexes, a day after a massive selloff prompted by
worries that the Federal Reserve may start winding down bond buying
later this year.
The Nasdaq Composite (RIXF) lost 11 points, or 0.3%, to 3,353,
as the tech-heavy index was hurt by a 9% drop in shares of Oracle
Corp. (ORCL). The tech bellwether delivered a disappointing
quarterly earnings report late Thursday.
The S&P 500 index (SPX) was nearly unchanged at 1,588,
erasing gains, with Oracle the top decliner.
Information technology and materials led losses among its 10
major industry groups, while consumer staples posted the biggest
gains.
The Dow Jones Industrial Average (DJI) gained 20 points, or
0.1%, to 14,778, with Procter & Gamble Co. (PG) its top
gainer.
The main indexes all opened with solid gains, then pulled back
from their session highs, with the Nasdaq turning negative.
The Dow's slide on Wednesday and Thursday -- a drop of 560
points or 3.66% -- was its worst two-day drop since the two
sessions ended Nov. 1, 2011, both in terms of points and
percentage.
"The rebound we're seeing in U.S. futures is simply due to the
fact that investors overreacted to [Federal Reserve Chairman] Ben
Bernanke's comments on Wednesday," said Craig Erlam, market analyst
with Alpari U.K., in emailed remarks early Friday.
Goldman Sachs analysts said Friday in a note that their top
recommendations for 2013 is still to buy stocks and sell bonds.
"We continue to expect the index will close the year at 1,750, a
rise of approximately 10% from today's level," the analysts
wrote.
"However, median historical drawdown episodes suggest at some
point during the next six months that the S&P 500 may decline
to the mid-1,500s before rebounding to our year-end target."
Jonathan Krinsky, chief technical strategist at Miller Tabak,
also sees potential support for the S&P 500 in the mid-1,500s.
"We have just broken the psychological 1,600 level after two prior
tests, which now creates short-term resistance in the 1,598 to
1,608 range," Krinsky wrote in a note.
"There should be downside support in the 1,550-1,575 area, which
marked major resistance over the last decade."
Friday is a quadruple-witching session, meaning expirations for
index futures, options on index futures, single-stock futures and
stock options. Such sessions can be the most heavily traded days of
the year.
Investors also are absorbing remarks from St. Louis Federal
Reserve President James Bullard, who explained on Friday why he
voted against the latest Fed policy decision. Bullard said the
decision by the Federal Reserve to lay out its plans to taper bond
buys was badly timed. The Fed should have waited "for more tangible
signs" of economic improvement and a halt in the downward direction
for inflation, according to Bullard.
Facebook Inc. shares (FB) rose 2%. UBS analysts on Friday
upgraded the social-network company to a buy rating, citing new
monetization efforts and higher advertising revenue.
On Thursday, the Dow dived 354 points, or 2.34%, representing
its largest one-day percentage decline since Nov. 7, the day after
the U.S. election, and its largest one-day points drop since Nov.
9, 2011. Gold and oil prices also tumbled, while the dollar and the
10-year Treasury yield jumped.
On Friday, most Asian stocks continued to fall, though Japanese
stocks advanced. European stocks were mixed.
Gold futures rose $8 to $1,294 an ounce, while oil edged
down.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires