Stocks Tumble As Witching Lifts Trade

The new market uptrend faced its first serious loss Friday as stocks sold off while volume ballooned in a quadruple witching session.

The NYSE composite carved off 0.8%, the Nasdaq 0.7%, the S&P 500 0.5% and the Dow 0.3%.

Volume was up sharply on both major exchanges. Quadruple witching is the quarterly expiration of futures and options. It often leads to increased volatility and higher volume.

The action slapped all four major indexes with a distribution day. It was the first instance of institutional selling since the Nasdaq confirmed on March 1 that an uptrend was under way.

A distribution day is a price decline in a major index in higher volume than the prior session.

Although it points to institutional selling, a single day of distribution alone is not particularly worrisome. Also, the witching inflated volume Friday.

The market remains in a confirmed uptrend.

Indexes had been slowly climbing despite a load of worries.

Greece returned to the front burner Friday as a dispute developed in Europe on a potential bailout. Germany prefers that a bailout come from the International Monetary Fund. France advocates a European solution. The dollar strengthened vs. the euro on the uncertainty.

The rise in the dollar hurt most commodities. For the day, HMO and hospital stocks did well while oil, gold miners and semiconductor stocks fell.

Goldman Sachs added to the anxiety Friday when it cut estimates for banks and brokerages.

Meanwhile, India's central bank unexpectedly raised interest rates. This sharpened concerns that other nations will have to join the inflation fight, perhaps slowing the economic recovery. Earlier this month, Australia and Malaysia raised interest rates.

As President Obama's health legislation chugged toward a vote, industrial equipment maker Caterpillar (CAT) warned that the plan would cost the company $100 million in the first year alone.

The Dow added 1.1% for the week, the S&P 500 0.9%, and the Nasdaq and the NYSE composite 0.3% each.