U.S. stocks edged higher, reversing early losses and bucking a global sell-off stoked by economic jitters and Europe’s debt problems.
High-tech powerhouse Hewlett-Packard Co. was among the stocks constraining bigger broader market gains early Friday, plunging 21 percent, the most in the Standard & Poor’s 500 index. The company said Thursday that it will shutter its mobile business, sell or spin off its PC business and pay $10 billion for a business software company.
Shares of software maker Intuit Inc. soared 12 percent, the most in the S&P 500, after the company reported better-than-expected earnings in the fiscal fourth quarter.
European banking shares fell near two-and-a-half-year lows, dragged down by rumors about banks’ potential losses on bonds issued by heavily-indebted governments. Earlier, Asian shares took a beating, with major indexes in China and Japan losing more than 2.5 percent.
Thursday marked a return to the volatile trading that led to record-setting market swings last week. A raft of bad economic news overseas and in the U.S. spooked investors. Economists with Morgan Stanley said that the U.S. and Europe are “dangerously close to recession,” adding, “it won’t take much in the form of additional shocks to tip the balance.”
JPMorgan Chase & Co. followed suit on Friday, slashing its fourth-quarter growth forecast to 1 percent from 2.5 percent. An analyst said business sentiment, household wealth and global growth all look worse than just a few weeks earlier. That will keep economic growth nearly flat in the first quarter of 2012, JPMorgan analyst Michael Feroli said in a research note.
Investors continued to swap risky investments for those viewed as safe. The yield on the benchmark 10-year Treasury note rose slightly to 2.10, after hitting a record-low below 2 percent on Thursday. Bond yields fall as their prices rise.
As the selling continued overseas on Friday, gold rose as high as $1,881 an ounce. Oil prices fell as traders feared a global slowdown that would cut demand for crude.
The Dow Jones industrial average rose 12 points or 0.1 percent, to 11,002. The Standard & Poor’s 500 index rose 5, or 0.4 percent, to 1,145. The Nasdaq composite index rose 17, or 0.7 percent, to 2,397.
The market’s gyrations are defying the typical pattern for late-summer trading. Activity in the market often slows before the Labor Day holiday in early September.
But this year, a growing number of economists fear that the U.S. and Europe might tip back into recession. And no one knows how much Europe’s biggest banks will lose on their holdings of debt issued by financially-strapped nations such as Greece.
Short rallies are common in a falling market. Some of the buying comes from investors looking for cheap stocks. And sometimes, as was the case this week, there is enough good news to make investors willing to take some chances on stocks.
Much of the recent volatility in U.S. markets has been driven by events overseas. Exports from Japan fell for a fifth straight month, its government said Thursday. Reports that the French and German economies barely grew in recent months have stoked fears of a global economic slowdown.
Traders and bankers are growing increasingly alarmed about the spiraling debt crisis in Europe. The agreement underlying Greece’s financial rescue might be splintering. Europe’s biggest economies would struggle to afford possible bailouts for other neighbors, such as Spain and Italy.
Banks in Europe look fragile. Many are exposed to massive losses on bonds issued by nations such as Greece and Portugal. No one knows how much bad debt each bank holds. Some are relying on emergency infusions from the European Central Bank to keep the system afloat.
Bad economic news in the U.S. added to those fears on Thursday. Before markets opened, the government said that more people joined the unemployment line last week. Consumer inflation in July was the most since march, as higher fuel and food costs continued to squeeze household budgets. Home sales continued to slide. And a Federal Reserve survey showed that manufacturing in the Philadelphia region had slowed sharply, a troubling sign for a sector that has helped power the economic recovery.
Thursday, the Dow closed down 420 points, or 3.7 percent, at 10,991. The Standard & Poor’s 500 index fell 53, or 4.5 percent, to 1,141. The Nasdaq composite fell 131, or 5.2 percent, to 2,380.
The Dow is down 13.6 percent since stocks began falling on July 21, draining billions from American’s retirement savings and other investment accounts.