The volatility this week interrupted what had been a dramatic rally for the market as investors re-evaluated their expectations for future economic growth.
Wall Street managed to end a bumpy day broadly higher Friday but still finished with its worst week in nearly three months.
The S&P 500 rose 1.3 percent a day after dropping nearly 6 percent in its biggest rout since mid-March. It lost 4.8 percent for the week, snapping a three-week winning streak for the benchmark index. Small-company stocks and bond yields rose, meaning investors were a bit more willing to take on risk again a day after the sell-off.
The volatility this week interrupted what had been a dramatic rally for the market as investors re-evaluated their expectations for future economic growth, which many skeptics have been saying were overly optimistic.
After surging Monday, stocks sold off for three straight days as a rise in COVID-19 cases in the U. S. and a discouraging economic outlook from the Federal Reserve dashed investors’ optimism that the economy will recover relatively quickly as states lift stay-at-home orders and businesses reopen.
“Yesterday was the market taking a needed breath and saying ’OK, this is probably going to take more time than we were expecting,” said Willie Delwiche, investment strategist at Baird. “Today, it’s ‘maybe we overreacted yesterday.’”
The comeback rally lost some of its early strength as the day went on. The S&P 500 gained 39.21 points to 3,041.31 after shedding more than half of its early gains.
The Dow Jones Industrial Average rose 477.37 points, or 1.9 percent, to 25,605.54. It had been up more than 800 points in the early going.
The Nasdaq, which climbed above 10,000 points for the first time on Wednesday, gained 96.08 points, or 1 percent, to 9,588.81. The Russell 2000 index of smaller companies fared better than the rest of the market, climbing 31.
