US stocks snap higher a day after entering a 'correction'

U.S. stocks moved sharply higher in early trading Friday, recouping some of the ground lost a day earlier when indexes plummeted, deepening a weeklong sell-off that knocked the market into a "correction" for the first time in two years.

The Dow Jones industrial average was briefly up more than 300 points in early trading, a day after it suffered its second 1,000-point drop in a week.

Even with the solid start, the Standard & Poor's 500 index, the benchmark for many index funds, was on pace to finish its worst week since January 2016.

The S&P 500, the benchmark for many index funds, rose 30 points, or 1.2 percent, to 2,611 as of 9:49 a.m. Eastern Time. The Dow gained 282 points, or 1.2 percent, to 24,142. The Nasdaq composite added 83 points, or 1.2 percent, to 6,861.

On Thursday, the S&P 500 and Dow entered a "correction" - that is, a 10 percent decline from its latest peak. The indexes reached their latest record highs just two weeks ago.

Friday's gains were broad, with technology stocks, banks and consumer-focused companies accounting for much of the pickup. Some of the market's biggest winners over the past year were leading the market higher. Amazon rose 2.2 percent.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.86 percent from 2.83 percent.

The early rally in U.S. stock indexes followed a broad slide in global markets.

In Europe, Germany's DAX fell 1.2 percent, while France's CAC 40 lost 1.2 percent. Britain's FTSE 100 shed 0.7 percent. Asian markets fell more sharply. Tokyo's Nikkei 225 lost 2.3 percent and Hong Kong's Hang Seng gave up 3.1 percent.

Investors also had their eye on the budget battle in Washington. President Donald Trump on Friday signed a $400 billion budget deal that sharply boosts spending and swells the federal deficit, ending a brief federal government shutdown.

U.S. stocks started to tumble last week after the Labor Department said workers' wages grew at a fast rate in January.

Investors worried rising wages will hurt corporate profits and could signal an increase in inflation that could prompt the Federal Reserve to raise interest rates at a faster pace, putting a brake on the economy.

On Wall Street, many companies that rose the most over the last year have borne the brunt of the selling. Facebook and Boeing have both fallen sharply.

Financial analysts regard corrections as a normal event but say the latest unusually abrupt plunge might have been triggered by a combination of events that rattled investors. Those include worries about a potential rise in U.S. inflation or interest rates and whether budget disputes in Washington.

The market, currently in its second-longest bull run of all time, had not seen a correction for two years, an unusually long time. Many market watchers have been predicting a pullback, saying stock prices have become too expensive relative to company earnings.

"We may have seen the worst, but it's too early to say for sure. However, our view remains that it's just another correction," said Shane Oliver of AMP Capital in a report.

Corrections of up to 15 percent "are normal," said Oliver.

"In the absence of recession, a deep bear market is unlikely," he said.

American employers are hiring at a healthy pace, with unemployment at a 17-year low of 4.1 percent. The housing industry is solid and manufacturing is rebounding.

Major economies around the world are growing in tandem for the first time since the Great Recession and corporate profits are on the rise. That combination usually carries stocks higher. But stock prices have climbed faster than profits in recent years. Many investors justified that by pointing out that interest rates were low and few alternatives looked like better investments. Fast rising interest rates would make that argument much less persuasive.

In currency markets, the dollar edged up to 108.87 yen from Thursday's 108.84 yen. The euro dipped to $1.2251 from $1.2263.

Benchmark U.S. crude lost 77 cents, or 1.3 percent, to $60.38 per barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, slid 94 cents, or 1.5 percent, to $63.87 in London.