Chinese shares sank 4 per cent, as concern about rising borrowing costs and soaring volatility put them on course for their worst week since the height of the euro zone crisis - hurt by the global share drop and by traders closing positions before the Lunar New Year holidays.
"I don't see any reason to think that we're setting a pattern for next week or the rest of the year", said Mr Rob Stein, chief executive officer of Astor Investment Management. "The only pattern we're setting is more volatility".
The Dow fell by as much as 1,500 points on Monday, its largest such decline that erased its year-to-date gains.
The S&P 500 increased by 1.49 percent reaching to 2,619.55 whereas the Nasdaq Composite gained 97.33 points reaching to 6,874.49.Meanwhile, on Friday the best performing group was Technology.
Even with Friday's gains, the benchmark S&P 500 was down 5.2 per cent for the week, its biggest weekly percentage drop since January 2016, as volatility spiked back up. For the week, the sector that got hammered the most was energy. Thomson Reuter's data revealed that ninety-six S&P 500 stocks were down almost 20 percent from their own 1 year highs.
This week's sell-off followed a stronger-than-expected jobs report in the USA earlier in February that fuelled worries over inflation and concerns the Federal Reserve will raise rates in the world's largest economy at a faster pace than expected.
"Over the last half a dozen of years we have been saying equity valuations can be higher because we are living in a low interest rate and low inflation environment but that's reversing a little bit and that's what we are staring at now", said Art Hogan, chief market strategist at B. Riley FBR in NY.
The yield on benchmark 10-year U.S. Treasuries hovered around 2.85 percent after touching a four-year peak of 2.885 percent on Monday. "And that is a process that is playing out".
"Higher rates are going to slow the economy, we just don't know when and we don't know which rates to watch, and I think that's the debate that's now playing out in the market", he said.
"While volatility in the markets has eased over the last couple of days, it has remained at very high levels-probably a sign of the ongoing nervousness among investors which may leave markets vulnerable to further declines", Craig Erlam, senior market analyst at Oanda said in a note.
LONDON: European shares fell to their lowest level in nearly six months on Friday after a roller coaster week marred by a historic spike in volatility on worries a comeback of inflation would speed a shift to tighter monetary policies.
In the latest day of strong trading volume, about 12 billion shares changed hands in USA exchanges on Friday, well above the 8.5 billion daily average over the last 20 sessions.
Advancing issues outnumbered declining ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.36-to-1 ratio favored advancers. The Nasdaq plummeted by 5.1%, while the Dow and the S&P 500 both plunged by 5.2%.