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 per cent, their worst weekly loss in six months. An index measuring the performance of small-company stocks had its worst week since early 2016.
Big technology and consumer-focused companies led the recovery Friday. Longtime favourites of many investors, they had plunged in the last few days.
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 per cent to $222.11 and Microsoft gained 3.5 per cent to $109.57. Amazon jumped 4 per cent to $1,788.41. Those are the three most valuable companies in the U.S., and they suffered startling declines the last few days: on Wednesday each took its biggest loss in more than two years. That made for a dramatic end to three months of calm on the U.S. market.
The S&P 500 index rose 38.76 points, or 1.4 per cent, to 2,767.13 to end a six-day losing streak. The benchmark index tumbled 4.1 per cent this week, and it's down 5.6 per cent since from its latest record high, set Sept. 20. Thanks in part to the big gain for technology companies, the Nasdaq composite jumped 167.83 points, or 2.3 per cent, to 7,496.89.
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 per cent, at 25,339.99.
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 per cent, to 1,546.68 to wrap up its largest loss in one week since January 2016. High-dividend stocks like utilities and real estate investment trusts also rose less than the rest of the market. They held up relatively well over the past few days. Investors view them as relatively safe, steady assets that look better when growth is uncertain and the rest of the market is in turmoil.
U.S. automakers Ford and General Motors continued to slump. GM shed 1.6 per cent to $31.79, its lowest in almost two years. Ford, trading at its lowest in almost nine years, dipped 1.9 per cent to $8.64. Both have plunged this year as they deal with slowing sales and the Trump administration's tariffs on steel and aluminum, which are sending their manufacturing costs higher.
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 per cent 3.13 per cent. At the beginning of the year it stood at 2.46 per cent.
U.S. crude oil added 0.5 per cent to $71.34 a barrel in in New York. Brent crude, the international standard, picked up 0.2 per cent to $80.43 a barrel in London.
Wholesale gasoline rose 0.5 per cent to $1.94 a gallon. Heating oil fell 0.5 per cent to $2.32 a gallon. Natural gas lost 1.9 per cent to $3.16 per 1,000 cubic feet.
Asian stocks also rebounded. Japan's Nikkei 225 index gained 0.5 per cent after sinking early in the day and following a nearly 4 per cent loss on Thursday. Hong Kong's Hang Seng surged 2.1 per cent and the Kospi in South Korea rose 1.5 per cent.
European stocks finished mostly lower. The French CAC 40 dipped 0.2 per cent and so did the FTSE 100 in Britain. The DAX in Germany slipped 0.1 per cent.
After a big jump Thursday, gold lost 0.5 per cent to $1,222 an ounce. Silver rose 0.2 per cent to $14.64 an ounce. Copper slipped 0.1 per cent to $2.80 a pound.
The dollar slipped to 112.01 yen from 111.94 yen. The euro fell to $1.1563 from $1.1594.
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Associated Press Writer Annabelle Liang contributed from Singapore.
