NEW YORK — U.S. stocks erased late-Friday gains as profit-takers stepped in ahead of the close, with the major indexes ending with daily losses but up on the week, capping a volatile streak involving wild swings in either direction amid signs of a possible thaw in the credit markets.
The Dow Jones industrial average fell 127.04 points, or 1.4 percent, to end at 8,852.22, giving the blue-chip index a weekly gain of 4.75 percent, and marking its first up week in five.
Ahead of Wall Street’s open, stock futures had trimmed losses after a further decline in the Libor, a key short-term borrowing rate, raising hopes that massive bank bailouts by European and U.S. governments will thaw frozen credit markets.
Possibly taking a cue from billionaire investor Warren Buffett, who wrote in Friday’s New York Times that he would invest in stocks, the market solidified gains in afternoon trades, only to turn course lower as the session wrapped up.
Stocks had begun the session sharply lower after the U.S. reported new-home building fell to a 17-year low and President Bush discussed efforts to rescue the embattled financial system in the face of global recession.
“Volatility should remain the main feature of Friday trade, whipsawing both bond and stock traders,” said analysts at Action Economics.
Twenty-four of the Dow’s 30 components closed lower, the declines fronted by Caterpillar Inc., off 7.2 percent. Kraft Foods Inc. gained the most, up 4.1 percent.
The S&P 500 Index fell 5.88 points, or 0.6 percent, to 940.55, up 4.6 percent from the previous Friday’s close.
The Nasdaq Composite Index shed 6.42 points, or 0.4 percent, to 1,711.29, putting the technology-laden index 3.7 percent ahead of where it stood at the previous Friday’s close.
Industrials led sector declines that stretched across nine of the S&P’s 10 industry groups, with only energy closing above water.
Standouts in the energy sector included Peabody Energy Corp., up 11.7 percent, and Consol Energy Inc., ahead 8.8 percent.
With the Organization of Petroleum Exporting Countries moving up its scheduled meeting to this coming Friday, crude futures gained $2 to end at $71.85 a barrel on the New York Mercantile Exchange. While up for the session, oil posted a weekly loss of $5.85, or 8 percent, from the previous Friday’s closing level of about $77 a barrel.
Volume on the New York Stock Exchange topped 1.7 billion, and advancers edged just ahead of decliners. On the Nasdaq, 1.3 billion shares traded, and decliners beat advancers 5 to 4.
U.S. consumer sentiment fell in October, with the University of Michigan/Reuters index falling to 57.5 from a reading of 70.3 in late September.
Before the open, stock futures had extended declines as the Commerce Department estimated housing starts declined 6.3 percent in September, sinking to their lowest annual rate since January 1991.
