The Dow Jones Industrial Average soared more than 170 points after a better-than-expected jobs report, dropped more than 500 points, and has since pared most of its losses.
Stocks pared most of their losses in another choppy session Friday, following a report that the ECB could purchase Italian and Spanish bonds if Italian Prime Minister Silvio Berlusconi commits to certain reforms.
On Thursday, traders were disappointed that the ECB were buying Portuguese and Irish bonds instead of Italian and Spanish debt. Investors are currently focused on Italy and Spain, as they feared these two countries would follow Greece's footsteps in seeking a bailout.
The Dow Jones Industrial Average erased some of their losses, but was still lower led by BofA and Alcoa, after nose-diving more than 500 points—its worst one-day fall since Dec. 2008. The blue-chip index was up 171 points at its session high this morning.
In the previous session, all three major averages tumbled into negative territory for the year. In addition, all three indexes fell into "correction territory," defined by a drop of 10 percent from its peak from its intraday high in Apr. 29.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 10 percent to trade above 34.
All key S&P sectors slid, led by techs and banks.
Stocks were also pressured amid market rumor that S&P is planning on downgrading the U.S.’s credit rating after the markets close Friday.
“The key remains Europe and Italy,” explained Cashin. “This weekend could be critical and I think it will be interesting to see how the U.S. traders will play the final hour…there’s no reason to be aggressively long [ahead of the weekend]”
European shares tumbled to see their biggest weekly decline in nearly three years amid worries about weak global growth and further contagion in the euro zone debt crisis, which threatens to engulf Italy and Spain.
On the economic front, hiring picked up in July as the Labor Department reported employers added 117,000 jobs last month and the unemployment rate dipped to 9.1 percent, an improvement from the past two months. Economists had expected a gain of 85,000 jobs.
Despite the positive data, experts remained skeptical.
"Come on! Tell me who these new hires are," said Todd Schoenberger, managing director at LandColt Trading. "A number (which still isn't anywhere near normal for a recovery period) surprised like this after the data we received, not to mention the significant layoff announcements we've been hearing about lately, just doesn't seem to add up."
Priceline surged to lead the S&P 500 gainers after the online travel agency reported a higher profit that beat expectations as strong growth at its overseas markets boosted bookings. At least two brokerages raised their price targets on the firm.
Bank of America slipped after Wells Fargo cut its rating on the financial giant to "market perform" from "outperform."