Dow, S&P 500 hit new highs; S&P set for six-day rally

By Angela Moon

NEW YORK (Reuters) - U.S. stocks rose on Friday, pushing the Dow and the S&P 500 to record levels and setting the benchmark index up to score its fourth weekly advance over the past five.

But trading is expected to become volatile as the session progresses. Friday marks a "quadruple witching" day - the expiration of stock options, index options, index futures and single-stock futures - as traders close hedging positions or roll them over at the last minute.

The six-day run of gains for the S&P 500 index was its longest winning streak since mid-April. For the week so far, the S&P 500 has advanced 1.3 percent, while the Dow has gained 1.1 percent and the Nasdaq has added 1.2 percent.

"I haven't been concerned for weeks, but I'm becoming a bit concerned now with where the market is, especially with many indicators hitting levels that are contrary to the normal reading," said Randy Frederick, managing director of active trading and derivatives for Charles Schwab in Austin, Texas.

Among the most notable indicators were the correlation of the CBOE Volatility Index, known as the VIX, and the S&P 500. The VIX usually moves inversely to the performance of the S&P 500. The fear gauge is near its lowest since February 2007 while the S&P 500 is at an all-time high.

"I'm expecting not a big correction like 10 percent or so, but a good 3 to 4 percent adjustment next week won't be a surprise," Frederick said.

The Dow Jones industrial average rose 21.67 points or 0.13 percent, to 16,943.13, after touching a record intraday high of 16,978.02. The S&P 500 gained 1.34 points or 0.07 percent, to 1,960.82, after climbing to a record intraday high of 1,963.91. The Nasdaq Composite dropped 1.77 points or 0.04 percent, to 4,357.56.

Oracle Corp shares slid 4.4 percent to $40.64 and ranked among the biggest drags on the S&P 500 after the software maker posted fourth-quarter results that disappointed investors looking for more progress against rivals selling web-based services.

But Carmax surged 17.9 percent to $53.40. The stock was the S&P 500's best performer after the used-vehicle retailer reported first-quarter earnings that topped analysts' expectations.

Darden Restaurants fell 2.6 percent to $48.23 after the chain restaurant operator reported a much lower-than-expected quarterly profit as costs soared and sales at its flagship Olive Garden restaurant chain declined.

Owens Corning tumbled 5.4 percent to $39.09 after the company lowered its 2014 earnings forecast, citing weakness in its roofing business.

The stock of midstream energy company Targa Resources Corp dropped 5 percent to $143.12 after Targa said it was no longer in discussions with Energy Transfer Equity LP, the pipeline company controlled by billionaire Kelcy Warren, regarding a deal. Shares of Targa Resource Partners, the company's energy logistics operating unit, sank 10.5 percent to $72.99.

(Editing by Jan Paschal)