By Dan Strumpf And Corrie Driebusch
Stocks rebounded Friday, a day after major indexes posted their
biggest one-day rout in two months.
The Dow Jones Industrial Average gained 75 points, or 0.4%, to
17021. The S&P 500 added six points, or 0.3%, to 1972. The
Nasdaq Composite Index advanced 17 points, or 0.4%, to 4484.
The Dow was buoyed by a rally in shares of Nike Inc., which
reported a 23% increase in quarterly profits. Shares of the
shoemaker surged 11%.
Investors were cautiously stepping in after Thursday's selloff,
though volumes were relatively subdued, a sign that some investors
were opting for a wait-and-see approach, traders said. On Thursday,
the Dow shed 1.5% and the S&P 500 declined 1.6%, amid a flurry
of concerns over economic growth and geopolitical tensions.
"Today it feels choppy and weak underneath this rally," said Joe
Saluzzi, a partner at brokerage Themis Trading. "I would treat this
cautiously. It's certainly not an all-clear signal."
Recent action leaves the major indexes poised for weekly losses.
The S&P 500 is off 1.8% this week. Investors remained concerned
about economic growth overseas, especially in China and the
eurozone.
Still, many long-term money managers remain optimistic about the
outlook for stocks, arguing that steady economic growth in the U.S.
means that the market can handle tighter Fed policy. Investors
widely expect the central bank to raise rates sometime next year
after winding down its bond-buying program in October.
"We're not surprised to see a bit of a selloff and volatility
because we've gone so long without seeing even a little bit of a
hiccup," said Sean Lynch, managing director of global equity
strategy and research for Wells Fargo Private Bank, which manages
$179 billion.
Before the open, the Commerce Department reported that the U.S.
economy grew at a rate of 4.6% in the second quarter, up from a
previous estimate of 4.2%. The result was in line with
expectations. The reading on September's consumer sentiment of
84.6, up from August's 82.5, was in line with expectations.
"Ultimately strong economic growth is good for the markets,"
said Doug Cote, chief market strategist at Voya Investment
Management. "I'm a buyer at these levels."
Stocks were mixed overseas. Japan's Nikkei Stock Average fell
0.9% to 16,229.86, dropping back into negative territory for the
year. In Europe, the Stoxx Europe 600 index gained 0.4%.
The dollar continued to strengthen against major rivals. The
euro fell to $1.269 from $1.2751 late Thursday.
The yield on the benchmark 10-year Treasury note rose to 2.539%,
according to FactSet. Yields move inversely with prices.
Investors on Friday continued to grapple with the reasons behind
Thursday's selloff. While many attributed it to actions in Russia
that seemed to pave the way for deeper tensions with the West,
others attributed it to high stock prices and uncertainty over the
Fed's timeline for monetary tightening.
Others viewed the decline as a return to normal trading patterns
after a sleepy summer for stocks. A number of unknowns are now on
the horizon, including the Fed's future course, the outlook for
Europe's stalling economy and a slowdown in growth in China, they
said.
"You should expect more volatility than we've had in the past
couple years, and this week is a bit of a taste of that," said Russ
Koesterich, chief investment strategist at BlackRock.
For Friday "it looks like the market has quieted down," Mr.
Koesterich said. "A couple things are helping--the GDP print was in
line, and also we didn't see a lot of follow-through selling
overseas."
In other corporate news, BlackBerry Ltd. posted earnings
results, which included a smaller-than-expected loss and a sharp
drop in revenue. Shares rose 6%.
Shares of Janus Capital Group Inc. rose 30%. Bill Gross, founder
of Pacific Investment Management Co., will join Janus next week.
U.S.-traded shares of Allianz SE, the German insurer that owns
Pimco, fell 6.5%.
Shares of Apple Inc. rose 1.8%. The company has been defending
itself against reports that its new, larger iPhone bends easily in
people's pockets. The company also released a new update of
software for its mobile devices after yanking its previous
update.
Write to Dan Strumpf at daniel.strumpf@wsj.com and Corrie
Driebusch at corrie.driebusch@wsj.com