Stocks close higher after two-day bloodbath
Last Updated Oct 12, 2018 4:47 PM EDT
Stocks closed higher on Friday, clawing back some of the ground they lost in a two-day rout that saw the, but they still suffered their biggest weekly loss in six months.
Even with Friday’s moderate gains, major U.S. indexes lost about 4 percent for the week. A recent spike in interest rates has spooked investors who fear higher borrowing costs could slow down the economy.
Big tech and consumer companies that had taken some of the worst hits earlier rose Friday, with longtime market favorites like Amazon and Apple roaring back with gains of about 4 percent each.
The Dow Jones Industrial Average rose 287 points, or 1.1 percent, to 25,339. The S&P 500 was up 1.4 percent, while the tech-heavy Nasdaq was up 2.3 percent.and European markets also rose Friday after several days of blood-letting on interest rate concerns as well as renewed fears of an extended U.S.-China trade war.
Bond prices fell, continuing the week’s trend. The yield on the 10-year Treasury rose to 3.14 percent.
Volatility is back
Analysts say the eruption of market volatility over the previous two days should not be surprising, especially after the long stretch of relative calm investors have enjoyed.
“Volatility is… not to be feared, but embraced, as varying data points will cause bouts of market anxiety. But remember that fundamentals are still strong,” said John Lynch, chief investment strategist at LPL Research.
Markets should settle some once companies start to report quarterly earnings and investors see that plenty of corporate profitability remains, UBS Global Wealth Management predicted in a note.
“Our expectation that corporate America will indicate that the earnings growth outlook remains favorable… should help the markets stabilize sooner rather than later,” UBS wrote. “The combination of good U.S. economic fundamentals, a very low probability of recession in the next 12 months, and equity valuations that are far from stretched all support our view that the bull market remains intact.”
–CBS News’ Irina Ivanova contributed reporting
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