Stocks rise at end of volatile week

NEW YORK – The stock market had another tumultuous ride this week as disarray in Europe heightened fears of a global economic slowdown. Despite a late-day comeback on Friday, major stock indexes are down about 10 percent from the peak they reached in late April.

Declines of that size are known as a “correction.” They are normal during a bull market and are even seen as a healthy way for a market to regain its bearings after a long period of uninterrupted gains. The correction that started this week is the first for the bull market that began in March of last year.

Whether the correction has mostly run its course or turns into a bear market, defined as a decline of 20 percent or more, is anyone’s guess. Stock indexes ended with solid gains Friday after starting the day lower and dipping below 10,000; the Dow closed up 125 points.

The Dow Jones industrial average plunged 376 points Thursday, its worst one-day drop in more than a year. Stocks are now about where they were in early February and down 2 percent for the year.

Jacob Gold, a financial adviser and CEO of Jacob Gold & Associates in Scottsdale, Ariz., says the market collapse of 2008 is fresh in the memories of clients who have been peppering him with calls and e-mails this week.

“They’re second-guessing themselves because they don’t want to end up giving the economy the benefit of the doubt and having it hurt them,” he said.

The immediate catalyst for this week’s sharp declines was deepening confusion over how Europe intends to get control of its public finances, restore order to financial markets and instill confidence in the euro.

The unsettling news from Europe this week also reminded investors how tepid the U.S. economic recovery really is in historical terms. Gross domestic product rose at an annual rate of 3.2 percent in the first three months of the year, but that’s not nearly as strong of a comeback as is typical after a deep recession.