Nasdaq ends higher in record weekly reversal

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stocks closed narrowly mixed on Friday, winding down several turbulent trading days with gains for the week, helped by a sharp rebound in crude oil and good economic data. ( Tweet This )

"Sort of an anticlimactic end to a dramatic week. It tells me the internal state of the market is such that we are looking to see similar trading days because what (triggered it) hasn't changed," said Scott Clemons, chief investment strategist at Brown Brothers Harriman. He expects corporate earnings to be the primary factor for markets in the longer term.

The Nasdaq Composite ended up 2.6 percent for the week, recovering more than a 8.79 percent plunge, in its biggest intra-week reversal on record. The index is the only major average positive for the year so far.

The S&P 500 eked out a gain of about 1 point on the day, holding a 0.91 percent gain for the week. The index recovered from a 5.27 decline for its biggest intra-week reversal since the week of Sept. 19, 2008, when Lehman Brothers went bankrupt.

"I think everybody is probably a little exhausted from the week. I think everybody decides to leave early and we end the week pretty calmly," said Mark Heppenstall, managing director at Penn Mutual Asset Management. "The trading has become thin. It'll become easier to push us around."

The Dow Jones industrial average closed down about 12 points after briefly falling more than 100 points in afternoon trade, with Wal-Mart and Johnson & Johnson the greatest weights on the index by dollar point impact. The blue chip index was down 6.62 percent at its lows for the week and ended up 1.11 percent in its biggest reversal since the last week of October 1987.

Jeff Carbone, co-founder and managing partner of Cornerstone Financial Partners, was watching Friday's close carefully as traders head into the weekend.

"Selloff—it would show a lack of confidence," he said.

The S&P 500 entered a Death Cross in morning trade Friday, with the 50-day moving average falling below the declining 200-day moving average for the first time since August 2011.

Traders also digested a rebound in oil from six-and-a-half-year lows, amid solid data and comments from Federal Reserve policy makers on the timing of a rate hike.

The energy sector closed up about 2 percent, off highs of more than 3 percent, but still the greatest S&P gainer for the day and the week. Crude oil topped $45 a barrel , briefly up more than 20 percent from Monday's low.

Crude oil futures for October delivery settled up $2.66, or 6.25 percent, at $45.22 a barrel on the New York Mercantile Exchange.

In an interview with CNBC, Fed Vice Chair Stanley Fischer said it is "early to tell" if the case for a September rate hike is more or less compelling.

"I think he studiously said not much of anything. The problem is when you say nothing everybody thinks something, so I think that's what's unfolding right now," said Dan Greenhaus, chief global strategist at BTIG.

Short-end bond yields jumped, with the 2-year Treasury note yield leaping to 0.73 percent. The 10-year Treasury yield traded near 2.18 percent. The dollar spiked, with the euro below $1.12 and the yen weaker near 121 yen against the greenback.

"I think a lot of it depends on the perception of the Fed," Jack Ablin, chief investment officer at BMO Private Bank, said of morning market moves. "I think the Fed has got the markets on a string right now."

He attributed the last two day's stellar gains to New York Fed President's William Dudley's comments Wednesday that a September rate hike had become less compelling.

"My view is it seems like Fed tightening is worth 6 to 7 percent in the market," Ablin said.

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The final read on August consumer confidence from the University of Michigan came in at 91.9, slightly lower than the initial print and July's figure.

The data takes particular prominence after Dudley singled out the index in comments Wednesday as an indicator of the volatile stock market's impact on the economy.

Central bank policymakers convene in Jackson Hole, Wyoming, for their annual meeting. However, Fed Chair Janet Yellen is among those not attending.

"After this week's volatility I see September as off the table," said Todd Hedtke, chief investment officer at Allianz Investment Management

"I don't think the Fed story is overly exciting despite the liftoff," he said. "I think it's certainly an important situation—the development in China and things playing out there."

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Concerns about slowing growth in the world's second-largest economy increased after China devalued its currency in mid-August, setting off sharp declines in global markets over the last two weeks.

The major averages closed Thursday more than 2 percent higher and out of correction territory.

With stellar gains on Wednesday and Thursday, the S&P had its best two days since March 2009 and the Dow had its best two days since December 2008, according to Howard Silverblatt of S&P Dow Jones Indices. Still, he noted the S&P 500 has lost $1.02 trillion in the last eight days.

Stocks plunged more than 3.5 percent on Monday, with the Dow falling 1,089 points for its biggest one-day point swing. The major averages attempted to bounce Tuesday but selling accelerated into the close, with the Dow and S&P off more than 1 percent.

In the morning, a Charles Schwab spokesman said the brokerage firm's online trading platforms are "temporarily unavailable," The system was restored around the market open.

The Dow futures (Chicago Board of Trade: @DJ.1) declined more than 150 points and trimmed losses to briefly trade less than 100 points lower, after data showed an increase of 0.4 percent in personal income and an increase of 0.3 consumer spending.

Personal income and spending is the Federal Reserve's preferred measure of inflation. June consumption was revised slightly higher to 0.3 percent from 0.2 percent.

"Inflation still very contained, actually a miss for the Fed, so no concerns around the Fed," said Peter Cardillo, chief market economist at Rockwell Global Capital.

"I think we're looking at a mixed to lower session, with the averages setting above correction mode," Cardillo said.

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On Friday, the benchmark Shanghai Composite (Shanghai Stock Exchange: .SSEC) index ended 4.8 percent higher , after an exceptionally volatile weak for Chinese stocks. The index closed down 7.8 percent on the week. European trade was cautious on Friday with markets ending narrowly mixed.

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The Dow Jones Industrial Average (Dow Jones Global Indexes: .DJI) closed down 11.76 points, or 0.07 percent, at 16,643.01, with Chevron leading advancers and Pfizer the greatest decliner. Apple posted gains of 7.1 percent for the week as the greatest gainer, while Pfizer lost 2.6 percent as the greatest laggard on the week.

The S&P 500 closed up 1.21 points, or 0.06 percent, at 1,988.87, with energy the greatest advancer and health care leading five sectors lower. Energy posted the greatest weekly gains, while utilities was the greatest decliner on the week.

Health care and consumer discretionary are the only two sectors in the black year-to-date.

The Nasdaq closed up 15.62 points, or 0.32 percent, at 4,828.32.

The CBOE Volatility Index (VIX) , widely considered the best gauge of fear in the market, traded above 27.

About two stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of about 1.0 billion and a composite volume of 3.9 billion in the close.

High-frequency trading accounted for 49 percent of August-to-date's daily trading volume of about 7.9 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.

Gold futures settled up $11.40 at $1,134.00 an ounce.

—CNBC's Robert Hum contributed to this report.

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On tap this week:


12:25 p.m.: Fed Vice Chairman Stanley Fischer at Jackson Hole; topic inflation

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