Following the worst couple of days on Wall Street since February, stocks staged a recovery on Friday amid signs inflationary pressures remain in check despite a humming economy and as earnings season kicked off with strong postings from major banks.
The Dow Jones industrial average jumped as many as 400 points at the US open, clawing its way back up from a 1,200-point drop since Tuesday. After briefly dipping into correction territory on Thursday, the Nasdaq Composite jumped more than 2%. The S&P 500 rose 1.5% to slightly above its 200-day moving average.
Earnings reports before the market open also gave Wall Street a boost, with JPMorgan Chase & Co rising more than 2% after posting a 24% jump in profits. Citigroup and Wells Fargo also topped analyst expectations.
Treasury yields resumed a climb after dipping in the previous session. Investors sold off bonds earlier this week amid fears of rising interest rates, sending the 10- and 2-year yields to multiyear highs.
"The key question is whether that is the end of the sell-off," Societe Generale analysts wrote in an email.
"We certainly see some scope for a consolidation in the near term, but because renewed pressure from issuance and the fact that some of the risk factors may be resolved in November, our medium-term bearish bond view remains intact."
All eyes have been on a string of government data releases this week, with investors paying particular attention to inflation gauges. The Federal Reserve is expected to continue tightening as the economy hums along, adding to three rate increases this year and eight since the financial crisis.
Early Friday, the Labor Department said import prices had climbed faster than expected in September. But that was largely due to a booming energy market — prices excluding oil were mostly unchanged. Data out a day earlier showed consumer prices rose 0.1% during that same time period, also falling short of economist expectations.
A measure of expected volatility on the S&P 500, the Cboe Volatility Index, backed off from its highest level since February. Also known as Wall Street's "fear index," the VIX tends to rise when stocks are down.
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