Market Report

Stocks rally to end bumpy week

In this June 24, 2016, file photo, a man walks by the New York Stock Exchange.  (AP Photo/Richard Drew, File)
In this June 24, 2016, file photo, a man walks by the New York Stock Exchange. (AP Photo/Richard Drew, File)

NEW YORK -- Stocks rebounded Friday, clawing back some of the week's steep losses, but the turbulent trading of the past 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 percent, their worst weekly loss in six months. An index measuring the performance of small-company stocks had its worst week since early 2016.

The S&P 500 index rose 38.76 points, or 1.4 percent, to 2,767.13 to end a six-day losing streak. The benchmark index tumbled 4.1 percent this week, and it's down 5.6 percent from its 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 percent, 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 percent, at 25,339.99.

Small companies didn't fare as well. The Russell 2000 index rose just 1.30 points, or 0.1 percent, 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.

Big technology and consumer-focused companies led the recovery Friday. Longtime favorites of many investors, they had plunged in the past 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 percent to $222.11 and Microsoft gained 3.5 percent to $109.57. Amazon jumped 4 percent to $1,788.41. Those are the three most valuable companies in the U.S., and they suffered startling declines the past 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 market's recent skid started last week, when strong economic data and positive comments from Federal Reserve Chairman Jerome Powell helped set off a wave of selling in the bond market as investors 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.

U.S. automakers Ford and General Motors continued to slump. GM shed 1.6 percent to $31.79, its lowest level in almost two years. Ford, trading at its lowest level in almost nine years, dipped 1.9 percent 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.

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.

Business on 10/13/2018

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