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Dow’s Winning Streak Screeches to a Halt

by Javier C. Hernandez

The Dow Jones industrial average was stopped in its tracks on Friday as it tried for a ninth consecutive session of gains, a feat last achieved in 1996.

A sharp drop in the price of oil weighed on shares of energy companies, and by day’s end, stocks were firmly in negative territory.

The market was hurt as the price of oil retreated nearly 2 percent, briefly dipping below $80 a barrel. That bolstered the appeal of the dollar, which strengthened against the euro and the British pound amid concerns about unwieldy deficits in Europe.

Despite the losses, the Dow ended the week 1.1 percent higher. On Friday, it fell 37.19 points, or 0.35 percent, to 10,741.98. The Standard & Poor’s 500-stock index fell 5.93 points, or 0.51 percent, to 1,159.90. It was 0.85 percent higher for the week.

The Nasdaq fell 16.87 points, or 0.71 percent, to 2,374.41, posting a 0.28 percent gain for the week. It was held back by the smartphone maker Palm, which fell more than 29 percent after offering a disappointing revenue forecast.

A decision by the central bank of India to raise interest rates for the first time in nearly two years brought jitters to the world’s equity markets. Analysts worry that the announcement could encourage other high-growth countries to follow suit as concerns about inflation grow. But investors bristled at the prospect of higher rates, which make lending more expensive and can hurt profit.

Currency markets were in flux on Friday amid lingering uncertainty about Greece, which is grappling with a wide budget deficit as deadlines for debt payments loom. No clear resolution has emerged for the nation, with Germany recently backing off its support of a European-led rescue package. Europe’s wealthier countries are now looking to the International Monetary Fund for help.

Germany’s words exposed new fissures in the effort to ward off a crisis for the Continent and its monetary union.

“It does not look like Europe has a united face to deal with the Greece situation,” said Marc Chandler, the global head of currency strategy at Brown Brothers Harriman.

The pound also weakened, falling more than 1 percent against the dollar, as an official at the Bank of England raised the possibility that the British economy could fall into another downturn. Andrew Sentance, a member of the monetary policy committee, told CNBC, “There is some risk of a double-dip recession but it is not the central forecast.”

Investors also remain concerned that looming elections could result in a fractured Parliament that would be unable to tackle Britain’s deficit problems.

The dollar benefited from those concerns, strengthening against most world currencies. Mr. Chandler said a consensus was emerging that the Federal Reserve would soon move to raise the rate it charged banks on short-term loans, known as the discount rate.

Interest rates were steady. The Treasury’s 10-year note fell 4/32, to 99 14/32, and the yield rose to 3.69 percent, from 3.68 percent late Thursday.

The stock market’s movements were clouded on Friday because of “quadruple witching,” the expiration of futures and options for stocks and stock indexes.

Despite Friday’s losses, investors said they thought some optimism had returned to the market. Economic data has been largely positive lately, and traders are expecting first-quarter earnings to show strong revenue growth. Many also say they think a government report on the labor market to be released next month will show that the economy created jobs in March.

“Investors are starting to get their confidence back, starting to get their feet back underneath them,” said M. Jake Dollarhide, chief executive of Longbow Asset Management.

But recent gains for the market have been small, and trading has been light on some of the most enthusiastic days, raising doubts about the durability of an upward turn.

“It’s a very tenuous, nervous time for Americans,” Mr. Dollarhide added.

New York Times