By Barbara Kollmeyer, MarketWatch , Ryan Vlastelica
Dow, S&P 500 entered correction territory in Thursday's plunge
U.S. stocks jumped on Friday, in the latest session as investors continued to adjust to an economic environment marked with the possibility of both higher inflation and bond yields.
Major indexes were poised for a sharply lower week, but the day's advance took the Dow and the S&P 500 back within 10 percentage points of their recent records.
Recent trading has been extremely volatile. The Dow has suffered a pair of 1,000-point drops this week, including in Thursday's session. That decline, which accelerated throughout afternoon trading, sparked global selling on Friday. While the U.S. was higher on the day, Europe was broadly lower, as was Asia. Chinese stocks bore the brunt of the blow, dropping as much as 6% at one point.
What are the main benchmarks doing?
The Dow Jones Industrial Average jumped 167 points, or 0.7%, to 24,032. The S&P 500 surged 22 points to 2,604, a gain of 0.9%. The Nasdaq Composite Index rallied 52 points, or 0.8%, to 6,829.
At current levels, Dow down is off 9.4% from its all-time high while the S&P is 9.2% below its own and the Nasdaq is down 8.7%.
According to financial blog SentimenTrader, Thursday's drop marked the Dow's fourth-fastest decline into correction territory from an all-time high, based on data that goes back to 1897.
Based on Thursday's close, 96 of the S&P 500's components are in bear market territory , defined as a 20% drop from a peak. Only 88 of the component aren't in correction territory.
The Cboe Volatility Index fell 9.5% to 30.28. The so-called "fear index" has more than doubled thus far this year; the S&P has undergone six sessions with a 1% move in 2018 (through Thursday's close), nearly equaling the number of such moves seen over the entirety of 2017.
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What's driving markets?
Driven by volatility worries and inflation concerns, stocks are facing their worst weekly performances in months. The Dow has lost 5.3% while the S&P is down 5.4% and the Nasdaq is off 5.1%. It is the biggest weekly percentage decline for both the Dow and the S&P since January 2016 and the biggest for the Nasdaq since February 2016.
In what could remove one political headwind from the market, President Donald Trump signed legislation to end a brief government shutdown after the House and Senate approved a budget deal .
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What are strategists saying?
"Right now markets are moving more on the emotions of trading, rather than economic fundamentals. Once the fears get rolling, it's purely sentiment and what traders can imagine in terms of where things can be going that drive price action," said Bruce McCain, chief investment strategist at Key Private Bank.
"We could have fallen enough to account for the new inflation fears, but we need to form a pretty stable base before investors can feel reassured the bottom won't fall out from under them, and it will take some more price action before that occurs."
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What stocks are active?
The day's gains were broad, with all 11 of the S&P 500's primary sectors up on the day. Technology led the advance, rising 2.1%. That was boosted by some positive earnings in the space. FireEye Inc. (>> FireEye Inc) shares surged 11% after the software-security company revealed its first quarterly profit . Separately, Nvdia Corp.(>> NVIDIA Corporation) jumped 7.4% after upbeat earnings ().
On the downside, Expedia Inc.(>> Expedia, Inc.) slid 13% after a wide earnings miss ().
Among other sectors, financials added 1.6%. Citigroup Inc. (C) rose 2.2% while JPMorgan Chase & Co. (>> JP Morgan Chase & Company) was up 1.8%.
Exxon Mobil Corp. (>> Exxon Mobil Corporation) rose 1.3% and was on track for its first positive session of the past six. The energy giant has lost 9.9% thus far this week, on track for its biggest weekly percentage loss since October 2008, during the worst of the financial crisis.
What are other assets doing?
European stocks were headed for the worst week in two years , while Wall Street's late plunge hit Asia markets hard , with several indexes posting their worst week in years. The Shanghai Composite Index closed down 4%, after losing as much as 6% in the session, while the Nikkei 225 index dropped 2.3%.
After trading above 2.80% all of Thursday's session, the yield on 10-year Treasury notes remained elevated, at 2.843%.
Gold futures were modestly lower, while crude-oil futures fell over 1%, and the ICE U.S. Dollar Index was moving up.
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