Stocks higher after two-day plunge

Wall Street stabilized at the end of a difficult week Friday, closing moderately higher as investors shook off some of their stress about interest rates. The major indexes each lost about 2 percent this week.

The higher close came after an erratic session, a sign that investors are still unsettled about inflation in the absence of any new economic data. An upswing in consumer prices this week sparked fears that the Federal Reserve will keep hiking interest rates; the Dow Jones industrial average plunged 291 points on Wednesday and Thursday.

Meanwhile, lower oil prices and further declines in bond yields brightened the market’s mood, as did a sharp recovery of the U.S. dollar against the Japanese yen. Dell Inc.’s plan to use Advanced Micro Devices Inc. chips in its computers propped up the tech sector.

But while Wall Street maintained its anxiety over the interest rates, stocks should soon see a significant bounce after several days of steep declines, said Ken McCarthy, chief economist for vFinance Investments.

“I think we are pretty overdone here,” McCarthy said of the market’s correction. “If you look at the fundamentals supposedly driving this (selloff), they’re very minor. We have some nervousness here, but the underlying fundamentals are still very strong.”

The Dow rose 15.77, or 0.14 percent, to 11,144.06, after gaining as much as 52 points earlier. The Dow declined 514 points, or 4.4 percent, in the previous six trading days.

Broader stock indicators also advanced. The Standard & Poor’s 500 index gained 5.22, or 0.41 percent, to 1,267.03, and the Nasdaq composite index swelled 13.56, or 0.62 percent, to 2,193.88.

Advancing issues led decliners by about 3 to 2 on the New York Stock Exchange, where volume of 2.15 billion shares topped 1.84 billion shares Thursday. Expiration of futures and options contracts made trading volatile.

The market has been on edge since the Fed last week said soaring commodities prices posed a problem for inflation and could necessitate higher interest rates. Many on Wall Street attribute the recent correction in stocks to investors coming to terms with the fact that more rate hikes are possible.

The Russell 2000 index of smaller companies rose 4.07, or 0.57 percent, to 722.54.

Asian markets fared better after this week’s inflation scare, with Japan’s Nikkei stock average rising 0.42 percent. Britain’s FTSE 100 lost 0.25 percent, Germany’s DAX index slid 0.11 percent and France’s CAC-40 was higher by 0.73 percent.