By Dan Strumpf
Stocks rose sharply Friday, capping a turbulent week for
financial markets in which investors grappled with concerns over
global growth and deepening troubles overseas.
Signs of a slowdown in China and Europe were met with reports of
economic traction in the U.S., sending major indexes swinging
between gains and losses. The prospect of worsening tensions
between Russia and Europe added to investors' concerns.
Many investors say they are bracing for additional volatility
through the remainder of the year, as market participants wrestle
with uncertainties such as the pace of economic growth and the
timeline for interest-rate increases by the Federal Reserve.
The Dow Jones Industrial Average on Friday gained 167.35, or 1%,
to 17113.15, ending a week that saw triple-digit moves in the index
every day. The last time the Dow moved that much for that long was
June 2013. Helping Friday's gains came from Dow component Nike
Inc., which rose 12% after posting a sharp rise in quarterly
profits.
The S&P 500 index gained 16.86 points, or 0.9%, to
1982.85--not enough to reverse a 1.6% slide on Thursday. The
broad-market index posted a 1.4% loss for the week.
The Nasdaq Composite Index gained 45.45, or 1%, to 4512.19.
Stocks kicked off the day higher Friday, with the gains
accelerating into the afternoon. Helping to juice stocks at the
open was a report from the Commerce Department that showed economic
growth was revised higher to 4.6% for the second quarter, in line
with expectations.
The print was the latest sign that economic growth in the U.S.
remains on the right track, if uneven. Many long-term money
managers remain optimistic about the outlook for stocks, arguing
that steady growth means 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.
"Ultimately strong economic growth is good for the markets,"
said Doug Coté, chief market strategist at Voya Investment
Management, which manages $214 billion. "I'm a buyer at these
levels."
Despite the sharp move higher, many traders said volumes on
Friday were relatively subdued, a sign that many investors were
opting for a wait-and-see approach. Investors will get a number of
potentially market-moving developments in the coming weeks. On
Thursday, the European Central Bank is scheduled to meet, while the
closely watched monthly jobs report for September is due on
Friday.
The subsequent weeks will mark the start of the third quarter
earnings season. And October marks the final month of the Federal
Reserve's bond-buying program.
"We certainly have some buyers stepping back into the market in
certain areas, but it's not one where we see folks buying things
hand over fist, " said Scott Bacigalupo, head of Americas cash
equities sales and trading at Bank of America Merrill Lynch. "It's
people putting their toe in the water again."
Investors cited a number of reasons behind the week's slide in
stocks. Many attributed it to actions in Russia that opened the
door to seizure of foreign assets. Others cited unease with high
stock prices and uncertainty over the Fed's timeline for monetary
tightening.
"Can equities rally in light of rates rising? I think that's
what some investors are trying to figure out and whether there is
an answer to that," Mr. Bacigalupo said.
Others viewed the decline as a return to normal trading patterns
after a sleepy summer for stocks. Investors must have to contend
with a number of uncertain variables as they enter the fourth
quarter, 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.
Shares of asset managers rose on the heels of Bill Gross's
departure from Pacific Investment Management Co. His new firm.
Janus Capital Group Inc., saw the biggest gains, surging 43%, but
other firms also posted strong gains, including BlackRock Inc., up
4.2%, and Legg Mason Inc., up 4.3%. U.S.-traded shares of Allianz
SE, the German insurer that owns Pimco, fell 6.2%.
As investors move money out of Pimco funds that Mr. Gross once
managed, "money will be freed up for distribution," said Justin
Wiggs, trader at Stifel Nicolaus. "I think it's a rising tide for
all those guys in terms of rising flow, and it also makes it
dangerous to be short them."
In other corporate news, BlackBerry Ltd. posted earnings
results, which included a smaller-than-expected loss and a sharp
drop in revenue. Shares rose 5.2%.
Shares of Apple Inc. rose 2.9%. The company has been defending
itself against reports that its new, larger iPhone bends easily in
people's pockets. The company also released an new update of
software for its mobile devices after yanking its previous
update.
The yield on 10-year Treasury notes declined to 2.535%, capping
the biggest one-week decline since Aug. 29.
Corrie Driebusch contributed to this article
Write to Dan Strumpf at daniel.strumpf@wsj.com