By Barbara Kollmeyer, MarketWatch , Ryan Vlastelica
Dow, S&P 500 in correction territory after Thursday's plunge
U.S. stock-index futures pointed to a mixed open on Friday, with trading expected to remain volatile at the end of a bruising week for stocks, one that could be the worst the Dow has seen since the height of the financial crisis in 2008.
Both the Dow and the S&P 500 officially entered correction territory on Thursday, with both down more than 10% from all-time highs reached last month. The blue-chip average has suffered two 1,000-point drops this week, including in Thursday's session. That decline, which accelerated throughout afternoon trading, sparked global selling on Friday. While Europe was broadly lower, Chinese stocks bore the brunt of the blow, dropping as much as 6% at one point.
The losses have come on mounting fears that faster-than-expected inflation will lead to more Federal Reserve hikes this year than currently expected.
The shutdown of the federal government was yet another worry for investors, as lawmakers worked through the night to get a budget deal through after funding ran out Thursday midnight.
What are the main benchmarks doing?
Stock futures pared earlier gains or turned negative as the U.S. open drew closer. Dow Jones Industrial Average futures gave up a gain of over 100 points, to drop 42 points to 23,926, while S&P 500 futures added less than 1 point to 2,594. Nasdaq-100 futures gained 33 points, or 0.5%, to 6,351.
Stocks went into free fall late Thursday , with the Dow Jones Industrial Average plunging 1,032.89 points, or 4.2%, to close at 23,860.46 and log its second-worst point decline ever. The S&P 500 index skidded 100.66 points, or 3.8%, to finish at 2,581, while the Nasdaq Composite Index sank 274.82 points, or 3.9%, to end at 6,777.16.
The Dow and S&P 500 were left off 10.4% and 10.2%, respectively, from their all-time highs.
According to SentimenTrader, this marks the Dow's fourth-fastest decline into correction territory from an all-time high, based on data that goes back to 1897. The Nasdaq is 9.7% below its own record.
Based on Thursday's close, 96 of the S&P 500's components are in bear market territory , defined as a 20% drop from a peak. Only 88 of the component are not in correction territory.
The Cboe Volatility Index soared 24% to 34.48 on Thursday. The so-called "fear index" has nearly tripled thus far this year; the S&P has undergone six sessions with a 1% move in 2018 (through Thursday), nearly equaling the number of such moves seen over the entirety of 2017.
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What's driving markets?
Driven by volatility worries and inflation concerns, stocks are facing their worst weekly performances in years, with the Dow down 6.5% as of Thursday's close. A drop of that magnitude has not been seen since the week of Oct. 10, 2008, when the Dow plummeted 18.15% in the thick of the global financial crisis.
However, should stocks mount a recovery Friday, that weekly loss might come nearer to a 6.2% drop in the week ending Jan. 8, 2016, or a drop of 6.4% in the week ending Sept. 23, 2011.
The S&P 500 is down 6.6% for the week, as of Thursday's close. That would mark the biggest weekly drop since a 7.2% decline in the week ended August 5, 2011.
Futures action indicates investors may be tempted to pick up cheap stocks, though some may choose to stay on the sidelines ahead of the weekend. Warnings in the run-up to what has been a breathless climb for stocks have been fairly persistent.
Volatility seemed to ebb a tiny bit, with futures for the Cboe Volatility Index down 4.2% to 32.06, according to FactSet.
President Donald Trump signed legislation to end a brief government shutdown after the House and Senate approved a budget deal .
Wholesale trade data for December is the only major item on the economic docket. That report is due at 10 a.m. Eastern Time.
Check out:MarketWatch's Economic Calendar
What are strategists saying?
"Right now markets are moving more on the emotions of trading, rather than economic fundamentals. Once the fears get rolling, it's purely sentiment and what traders can imagine in terms of where things can be going that drive price action," said Bruce McCain, chief investment strategist at Key Private Bank.
"We could have fallen enough to account for the new inflation fears, but we need to form a pretty stable base before investors can feel reassured the bottom won't fall out from under them, and it will take some more price action before that occurs."
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What stocks are active?
FireEye Inc. (>> FireEye Inc) shares surged 13% in premarket after the software-security company revealed its first quarterly profit .
Nvdia Corp.(>> NVIDIA Corporation) jumped 8% in premarket after upbeat earnings ().
Expedia Inc.(>> Expedia, Inc.) slid 16% after a wide earnings miss ().
What are other assets doing?
European stocks were headed for the worst week in two years , while Wall Street's late plunge hit Asia markets hard , with several indexes posting their worst week in years. The Shanghai Composite Index closed down 4%, after losing as much as 6% in the session, while the Nikkei 225 index dropped 2.3%.
After trading above 2.80% all of Thursday's session, the yield on 10-year Treasury notes remained elevated, at 2.843%.
Gold futures were modestly lower, while crude-oil futures fell over 1%, and the ICE U.S. Dollar Index was moving up.
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