Stocks turned mixed late Friday morning, giving up sharp early gains. But as volatility continued a week of turbulence, trading activity cooled down another notch.
The Dow Jones industrial average surged up 114 at the opening on encouraging news of noninflationary economic growth at home and signs of stability in financial markets abroad. But by late morning, the Dow was off 6.38 at 7,375.27, although broader market indexes were rising. Volume on the New York Stock Exchange, while heavy at 208 million shares changing hands in the first 90 minutes, was down from the 235 million of the same period Thursday.Selling of blue-chip stocks that make up the Dow began on the morning's gains as traders sought to cash in on the quick bounce back from Thursday, when Wall Street's best-known indicator fell 125.00 points to 7,381.67. Through Thursday, the Dow had dropped 650 points, or more than 8 percent, over five straight sessions.
Among the bright spots Friday was a calming of global markets, with major indexes rising in Asia and Europe. An International Monetary Fund bailout package for Indonesia, with the United States joining the rescue effort with a commitment of its own, also helped bolster confidence.
In addition, there was a government estimate that the U.S. economy managed sound 3.5 percent growth in the third quarter without stirring up inflation. An inflation measure linked to the gross domestic product had its smallest rise since 1964.
Even if the market's recent behavior has not yet become comforting, at least Wall Street's mood swings seem to be turning less violent.
With 1.6 billion shares changing hands Thursday on U.S. stock markets - leisurely compared with Tuesday's record-busting 2.83 billion, but still the 11th busiest day in history - analysts said it was significant that Thursday's decline never snowballed into another full-blown selling frenzy.
"Some people would find (Thursday's drop) disturbing, but at same time it's not untypical of a market's reactions a couple of days after a very sharp decline and a very sharp rally," said Eric Miller, chief strategist at Donaldson, Lufkin & Jenrette Securities, referring to Monday's 554-point plunge by the Dow and Tuesday's 337-point rebound.
The biggest damage Thursday was incurred among the shares of technology companies, which have a greater stake in Southeast Asia's crumbling fortunes than other industries. The technology-laden Nasdaq Stock Market fell 2 percent on Thursday.
"People are having a difficult time getting a clear idea about each company's specific exposure to Asia," said Robert Streed, senior investment adviser at Northern Trust in Chicago. "We know technology companies have more exposure, so technology companies are being painted with a broad brush. They rounded up the usual suspects and took them out to shoot them this morning."
Compounding the lingering concerns over Asia were mounting jitters over Latin America, where several developing nations roiled world financial markets about three years ago with their own fiscal crises.
Most world markets stabilized Friday, taking the lead from Hong Kong and Japan, which bounced back from morning losses.
In Hong Kong, where the global financial crisis began last week, the main stock market index rose 2.5 percent. Tokyo's key index gained 0.57 percent.
London and Paris markets turned lower in the afternoon, but the losses were minimal: Shares in both cities were off by only about a half a percentage point. German stocks were virtually unchanged.