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Stocks bounce back to end volatile week

Ken Martin

U.S. stocks are bouncing back on Friday as investors are enthusiastic about possible stimulus measures in Europe.

Markets are anticipating the European Central Bank will cut rates in September and resume a bond buying program, according to Reuters.

The major European markets traded higher.

Add Mexico as the latest country to cut interest rates overnight.

On the economic front on Friday, the Commerce Department said U.S. homebuilding fell for a third straight month in July amid a steep decline in the construction of multi-family housing units, but permits rose creating optimism. Housing starts dropped 4 percent to a seasonally adjusted annual rate of 1.191 million units last month.

Investors have suffered whiplash this week after the U.S. yield curve -- the difference between yields on the U.S. 10-year and 2-year Treasury bonds -- inverted for the first time since 2007. it has historically been an accurate forecaster of a coming recession.

The major U.S. stock indexes spent much of the day reacting to big moves in U.S. government bond yields, which fell sharply in the early going, fluctuated for much of the day, and then recovered some of their decline by mid-afternoon.

Stocks are down more than 2.4 percent this week.

The U.S.-China trade war has hammered American manufacturers and roiled global financial markets with fears that the world's largest economy could slip into a recession. Yet most analysts expect the U.S. economy to power through the rough patch, at least in the coming months, on the strength of solid consumer spending and a resilient job market.

Japan's Nikkei rebounded from early losses to gain 0.1 percent, Hong Kong's Hang Seng added 0.9 percent and China's Shanghai Composite gained 0.3 percent.

The Associated Press contributed to this article.

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