NEW YORK — The stock market had another tumultuous ride this week as disarray in Europe heightened fears of a global economic slowdown. Despite a late-day comeback Friday, major stock indexes are down about 10 percent from the peak they reached in late April.
Declines of that size are known as a “correction.” They are normal during a bull market and are even seen as a healthy way for a market to regain its bearings after a long period of uninterrupted gains. The correction that started this week is the first for the bull market that began in March of last year.
Whether the correction has mostly run its course or turns into a bear market, defined as a decline of 20 percent or more, is anyone’s guess. Stock indexes ended with solid gains Friday after starting the day lower and dipping below 10,000; the Dow closed up 125 points.
The Dow Jones industrial average plunged 376 points Thursday, its worst one-day drop in more than a year. Stocks are now about where they were in early February and down 2 percent for the year.
Jacob Gold, a financial adviser andchief executive of Jacob Gold & Associates in Scottsdale, Ariz., says the market collapse of 2008 is fresh in the memories of clients who have been peppering him with calls and e-mails this week.
“They’re second-guessing themselves because they don’t want to end up giving the economy the benefit of the doubt and having it hurt them,” he said.
The immediate catalyst for this week’s sharp declines was deepening confusion over how Europe intends to get control of its public finances, restore order to financial markets and instill confidence in the continent’s shared currency, the euro.
Greece is struggling to cope with staggering debt, and investors fear it could end up dragging other economically weak European countries down with it. If Europe’s banks crack down on lending, the thinking goes, other banks around the world could follow suit, tripping up economies around the world.
The Dow rose 125.38, or 1.3 percent, to 10,193.39. The broader Standard & Poor’s 500 index rose 16.10, or 1.5 percent, to 1,087.69. The Nasdaq composite index rose 25.03, or 1.1 percent, to 2,229.04.
The Dow fell below 10,000 during early trading Friday before recovering. It last fell through that level on May 6, when it briefly plunged nearly 1,000 points in an afternoon rout that was its biggest ever intraday slide. Regulators have said they are still unclear on what caused that brief plunge.
