(CBS NEWS) – U.S. stocks seesawed on Friday, jumping right after the opening bell before sliding into negative territory, then largely recovering by midafternoon — all one day after the marketfor the first time in two years.
The Dow was down by 296 points Friday afternoon after quickly rising nearly 350 points in early trading. The index suffered its second 1,000-point drop in a week on Thursday.
Blue-chip stocks suffered their two biggest-ever point declines on Monday and Thursday, respectively. The Dow Jones Industrial Average plunged more than 4 percent on each of those days.
After rising and falling, the S&P 500 was up 7 points, to 2,588, as of 2:59 p.m. Eastern Time. The Dow Jones industrial average gained 71 points, or three-tenths of one percent, rising to 23,931. The Nasdaq composite gained 15 points, or .2 percent, trading at 6,789.
What is a stock market correction?
A stock market enters a correction when it drops 10 percent below a recent peak, as U.S. stock did. The Dow dropped from a Jan. 26 peak of 26,567, closing at 23,860 — a plunge of 10.8 percent. The S&P 500 is down the same percentage, plummeting to close at 2,581 on Thursday.
Financial analysts regard corrections as a normal event but say the latest unusually abrupt plunge might have been triggered by a combination of events that rattled investors. Those include worries about a potential rise in U.S. inflation or interest rates and whether budget disputes in Washington might lead to another government shutdown.
“The U.S. equity market is seemingly waking up to the idea that we are in a higher rate environment amid rising inflation and steady Fed hikes,” Bank of America Merrill Lynch economists Ethan Harris and Aditya Bhave said in a client note ahead of trade opening on Friday.
Global markets fell on Friday, following the Dow’s decline on Thursday. In Europe, France’s CAC 40 lost 1.2 percent to 5,087, Britain’s FTSE 100 shed 0.7 percent to 7,122 and Germany’s DAX fell 1.2 percent to 12,110. All three had dropped around 2 percent the day before.
Asian markets fell more sharply. The Shanghai Composite Index tumbled 5.5 percent before ending the day down 4 percent at 3,129.85. Tokyo’s Nikkei 225 lost 2.3 percent to 21,382.62 and Hong Kong’s Hang Seng retreated 3.1 percent to 29,507.42.