Stocks struggled to stabilize in unsteady trading on Wall Street as an early gain quickly evaporated.
The Dow Jones industrial average briefly sank 500 points in afternoon trading after surging more than 349 points earlier in the day.
The Shanghai Composite in China suffered a 6% drop at one stage and, having fallen by 10% since the beginning of the month, now languishes at levels last seen in May previous year.
China was the worst performer in Asia on Friday - on track for its worst day in almost two years - as losses deepened from declines seen earlier this week. Even after this week's losses, the S&P 500 index is up 12.5 per cent over the past year.
The Standard & Poor's 500 index, the benchmark for many index funds, took only nine days to fall 10 percent from its all-time high on January 26. Eastern Time. The Dow tumbled 272 points, or 1.1 percent, to 23,587. The Nasdaq composite fell 170 points, or 2.4 percent, to 6,884.
Heavy selling pressure piled more pain on global stocks yesterday, putting them firmly on track for their worst weekly performance in years, as analysts wondered whether an overdue correction was rapidly turning into an equity market bloodbath.More news: Kim Yo Jong Fascinates, And Puzzles, In South Korea
Bond prices fell. The yield on the 10-year Treasury rose to 2.85 percent from 2.83 percent late Thursday. Skechers USA climbed $2.88, or 7.5 percent, to $41.06.
The pan-European Stoxx Europe 600 index declined 1.6 percent. The travel website's 2018 outlook also disappointed investors.
U.S. stocks attempted a timid recovery in morning business on Wall Street, but then slumped, only to gyrate a few more times between negative and positive territory, leaving traders with few clues as to how New York's trading day may end amid such staggering volatility.
Benchmark U.S. crude lost 77 cents, or 1.3 percent, to $60.38 per barrel on the New York Mercantile Exchange. Germany's DAX lost 2.6% while France's CAC 40 ended down 2%. Those stocks fall out of favor when bond yields rise, as they have been for the past few months, and many expect the trend to continue. Tokyo's Nikkei 225 was off 2.3 percent and Hong Kong's Hang Seng retreated 3.2 percent.
After hitting a high two weeks ago, USA stocks started to tumble last week after the Labour Department said workers' wages grew at a fast rate in January. That's good for the economy, but investors anxious it will hurt corporate profits and that rising wages are a sign of faster inflation. Facebook and Boeing have both fallen sharply.
Financial analysts regard corrections as normal events 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 USA inflation or interest rates and whether budget disputes in Washington. That's also a big change: The market has been stable in the past year because every time it inched lower, investors swooped in looking for bargains and soon sent them higher again. Many market watchers have been predicting a pullback, saying stock prices have become too expensive relative to company earnings. Britain's FTSE 100 shed 0.7 percent.More news: North Korea stages show of force with new missiles during parade
Scott Wren, senior global equity strategist for Wells Fargo Investment Institute, said investors are anxious that the higher wages could eat into corporate profits and that the Fed could "make a mistake" and raise rates too quickly. "It's taken nine days to go from the January 26 peak to where we are today". 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. And major economies around the world are growing in tandem for the first time since the Great Recession.
"By many metrics, the earnings picture looks good, and higher earnings provide the basis for valuation support and, I think, still higher stock prices if you look toward the end of the year", Sandven said.
Technology companies accounted for most of the broad gains, outweighing losses in energy stocks, which slumped as USA crude prices declined.
When volatility reasserted itself, that was always going to lead to some violent sell-offs, particularly in view of the fact that interest rates have been at close to zero in most advanced economies for the best part of a decade, meaning some investors have been moving in to riskier assets in search of yield.
Rising deficits could drive interest rates higher.More news: 5 dead after 'horrific murder spree' in Johnson County
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