NEW YORK — Stocks rebounded Friday, clawing back some of the week's steep losses, but the turbulent trading of the last few days left no doubt that the relative calm the markets enjoyed all summer had been shattered.
Major U.S. indexes ended the week down about 4
Big technology and consumer-focused companies led the recovery Friday. Longtime
A major factor cited by market watchers for the pullback was a sharp increase in interest rates, which can slow the economy and make bonds more attractive to investors relative to stocks.
Apple climbed 3.6
The S&P 500 index rose 38.76 points, or 1.4
The Dow Jones Industrial Average rose as much as 414 points early on, then gave it all up and turned slightly lower. It rebounded and finished with a gain of 287.16 points, or 1.1
The market's recent skid started last week, when strong economic data and positive comments from Federal Reserve Chair Jerome Powell helped set off a wave of selling in the bond market as investors they bet that the U.S. economy would keep growing at a healthy pace. That pushed bond prices lower and sent yields up to seven-year highs.
That drove interest rates sharply higher, which worried stock investors who felt that a big increase could stifle economic growth. The big swings in the market Friday suggest those fears haven't gone away. The VIX, a measurement of how much volatility investors expect, hasn't been this high in six months.
"What seems to have driven this is a fear interest rates were going to rise more quickly because the Fed was being too aggressive or the economy was going to overheat," said David Kelly, chief global strategist for JPMorgan Funds. Kelly said he doesn't think either of those fears is justified, as the Fed isn't raising interest rates that rapidly and economic growth hasn't sped up recently.
Small companies didn't fare as well. The Russell 2000 index rose just 1.30 points, or 0.1
U.S. automakers Ford and General Motors continued to slump. GM shed 1.6
The stocks have fallen further in recent days following reports Ford might cut jobs. In late September, Ford CEO Jim Hackett said the steel and aluminum duties would cost the company $1 billion through 2019.
Investors are also growing more concerned that U.S.-China trade tensions are impairing global economic growth. The International Monetary Fund cut its forecast for global economic growth this week because of trade tensions and increased interest rates.
Sam Stovall, chief investment strategist for CFRA, said he thought stocks fell too far, but there could be more turmoil ahead for the markets. While stocks had done well in spite of the rising trade tensions between China and the U.S., investors seem more worried now.
"Everybody has been pretty much dismissing the effect of the trade war on U.S. equities, and now they're beginning to think 'wait a minute, maybe there could be a problem,'" he said. "I don't think the reasons for the decline have been resolved."
Bond prices edged lower. The yield on the 10-year Treasury note rose to 3.15
U.S. crude oil added 0.5
Wholesale gasoline rose 0.5
Asian stocks also rebounded. Japan's Nikkei 225 index gained 0.5
European stocks finished mostly lower. The French CAC 40 dipped 0.2
After a big jump Thursday, gold lost 0.5
The dollar slipped to 112.01 yen from 111.94 yen. The euro fell to $1.1563 from $1.1594.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP
Associated Press Writer Annabelle Liang contributed from Singapore.
Marley Jay, The Associated Press