US equity markets took investors on a wild ride Friday, swinging between big gains and three-month lows and rattling investors who'd grown accustomed to tranquility before the turmoil set in last week.
During Friday's session alone, the S&P 500 swung from as high as up 1.5 per cent to down 1.9 per cent, echoing the big swings of the past week. The Dow moved in a range of more than 800 points.
The fresh volatility came a day after the benchmark S&P 500 and the Dow industrials confirmed they were in correction territory, both falling more than 10 per cent from January 26 record highs. On Friday, the intraday low for the tech-heavy Nasdaq also pulled it more than 10 per cent from its recent peak.
Treasury yields fluctuated before rising again as traders sought a haven from the tumult. The Cboe Volatility Index pushed above 40 at one point. Commodities including oil, gold and industrial metals moved lower.
"Sometimes making a bottom can take time," Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co, said by phone.
"Investors should be at least aware, cognisant, and expect a little more volatility after we go through this period of more cathartic volatility."
The S&P 500 Index rose 1.5 per cent as of 3.47pm in New York, the Dow Jones Industrial Average climbed 1.8 per cent and the Nasdaq 100 added 1.9 per cent.
Europe and Asia weren't spared from the drama that's afflicted global stocks in the five days.
The Stoxx Europe 600 Index clocked its worst week since 2016, losing almost half a year's gains.
China's benchmark fell the most in almost two years earlier, while the MSCI World Index is set for its biggest weekly drop since 2011. A measure of US bond-market volatility soared, as core European bond yields dropped.
The sharp sell-off in recent days was kicked off by concerns over rising inflation and bond yields, sparked by last week's January US jobs report.
Equities for years have looked relatively attractive compared to the low yields offered by bonds, but the rise in Treasury yields has diminished the allure of stocks, especially with stock valuations at historically expensive levels.
The yield on benchmark 10-year US Treasuries hovered around 2.82 per cent after touching a four-year peak of 2.885 per cent on Monday.
"That's part of this recalculation that has gone on in the market: How do we factor in higher bond yields?" said Willie Delwiche, investment strategist at Baird in Milwaukee. "And that is a process that is playing out."
The S&P 500 lost $US2.49 trillion in market value since January 26 through Thursday, according to S&P Dow Jones Indices.
Traders are now focusing on next week's US consumer-price data after a week in which the 10-year yield pushed as high as 2.88 per cent.
Equity investors took the signal to mean interest rates will rise as inflation gathers pace, denting earnings and consumers' spending power.
Bloomberg and Reuters
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