By Anora M. Gaudiano, MarketWatch , Ryan Vlastelica
Volatility index subsides as stocks rebound
U.S. stock-market indexes did an about-face in late-Friday
action, booking sharp gains for the session, but recording the
worst weekly losses in about two years, during one of the most
frenetic stretches of trading on Wall Street.
Climbing bond yields and higher inflation have been partly to
blame for igniting once-dormant volatility in the market, with
investors already on edge over lofty equity valuations following a
mostly relentless uptrend for assets perceived as risky.
What are the main benchmarks doing?
The Dow Jones Industrial Average finished the session up 330.44
points, or 1.4%, to 24,190.90, spanning more than 1,021 points as
the blue-chip gains made powerful intraday swings in to and out of
positive and negative territory. For the week, the Dow closed down
5.2%, marking its largest weekly decline since January 2016.
The S&P 500 ended up 38.55 points, or 1.5%, to 2,619.55,
with 10 of the 11 main sectors finishing with gains. Technology
shares led the advance, up 2.5%, while energy shares were the only
laggards, down 0.4%. The broad-market gauge spanned more than
100-points Friday moves.
For the week, the benchmark index lost 5.2%, also marking its
largest weekly drop since early January.
The Nasdaq Composite Index closed up 97.33 points, or 1.44%, to
6,874.47, but finished the week 5.1% lower, representing its worst
week since early February of 2016
On Thursday, the S&P 500 and the Dow entered correction
territory, defined as a decline of at least 10% or more from recent
highs.
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
(http://www.marketwatch.com/story/more-than-10-of-sp-500-stocks-are-in-a-bear-market-2018-02-08),
defined as a 20% drop from a peak. Only 88 of the components aren't
in correction territory.
(https://twitter.com/RyanVlastelica/status/961708128927657984)
The Cboe Volatility Index also switched between gains and losses
and closed 13.2% lower at 29.06. The so-called "fear index" has
more doubled so far this year; the S&P has undergone seven
sessions with a 1% move in 2018, nearly equaling the number of such
moves seen over the entirety of 2017.
As markets whipsawed, weekly trading volumes
(http://www.marketwatch.com/story/weekly-us-stock-market-volume-highest-since-august-2011-2018-02-09)
were the highest since August of 2011, according to Wall Street
Journal Digital Data.
Don't miss:Jim Cramer blames a 'group of complete morons' for
blowing up the market
(http://www.marketwatch.com/story/jim-cramer-blames-a-group-of-complete-morons-for-blowing-up-the-market-2018-02-08)
What's driving markets?
The Dow has suffered a pair of 1,000-point drops this week,
including in Thursday's session, something that has never happened
in history, as inflation fears and rising yields dogged
markets.
See:Volatility shock wave has wiped $5.2 trillion from markets,
sent 5 sectors into correction territory
(http://www.marketwatch.com/story/volatility-shock-wave-has-wiped-52-trillion-from-global-markets-sent-five-sectors-into-correction-territory-2018-02-08)
President Donald Trump's signed of legislation to end a brief
government shutdown after the House and Senate approved a budget
deal
(http://www.marketwatch.com/story/senate-passes-budget-deal-as-government-remains-shut-down-2018-02-09).
Check out:MarketWatch's Economic Calendar
(http://www.marketwatch.com/economy-politics/calendars/economic)
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."
Check out: Fed's George says 3 rate hikes this year is
'reasonable baseline'
(http://www.marketwatch.com/story/feds-george-says-three-rate-hikes-this-year-is-reasonable-baseline-2018-02-08)
And see:Is the decadeslong downtrend in interest rates finally
over?
(http://www.marketwatch.com/story/is-the-decades-long-downtrend-in-interest-rates-finally-over-2018-02-08)
What stocks are active?
Energy shares were among the worst hit. Shares of Baker Hughes,
a GE Company (BHGE) dropped 3.6%, while Schlumberger NV (SLB) slid
3.3%.
Cboe Global Markets Inc.(CBOE) shares ended down 3.6% as
investors shunned the stock in the fallout over futures on the Cboe
Volatility Index. Shares are off more than 20% over the week.
FireEye Inc. (FEYE) shares surged 9.4% after the
software-security company revealed its first quarterly profit
(http://www.marketwatch.com/story/fireeye-earnings-show-first-quarterly-profit-stock-jumps-more-than-12-2018-02-08).
Nvdia Corp.(NVDA) shares surged 6.7% after upbeat earnings
().
On the downside, Expedia Inc.(EXPE) plunged 15.5% after a wide
earnings miss. ()Rivals TripAdvisor Inc.(TRIP) shares fell
4.3%.
Shares of Mattel Inc.(MAT) rose 7.9% after the toy maker
appointed a new chairman.
What are other assets doing?
European stocks
(http://www.marketwatch.com/story/european-stocks-head-lower-after-wall-street-fails-to-rebound-2018-02-08)suffered
their worst week in two years
(http://www.marketwatch.com/story/european-stocks-head-for-worst-week-in-2-years-as-global-selloff-rages-on-2018-02-09),
while Wall Street's late plunge hit Asia markets hard
(http://www.marketwatch.com/story/asian-markets-skid-after-wall-street-sinks-into-correction-territory-2018-02-08),
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%.
The yield on 10-year Treasury notes rose to 2.86%.
Gold futures settled 0.3% lower and marked the steepest weekly
decline in two months
(http://www.marketwatch.com/story/gold-prices-slip-set-for-2nd-straight-weekly-fall-as-global-stocks-fall-into-correction-2018-02-09),
while crude-oil futures dropped 3.3% to settle below $60 a barrel
(http://www.marketwatch.com/story/crude-oil-slides-for-6th-day-and-heads-for-76-weekly-slump-2018-02-09)
for the first time this year. The ICE U.S. Dollar Index moved up
0.3% to 90.477, notching its biggest weekly advance since 2016
(http://www.marketwatch.com/story/dollar-on-track-for-best-week-since-october-despite-global-market-jitters-2018-02-09).
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--Barbara Kollmeyer contributed to this article
(END) Dow Jones Newswires
February 09, 2018 17:27 ET (22:27 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.