U.S. stocks slip at the end of a bumpy session

U.S. stocks slipped in late trading on Wednesday, capping two days of volatile trading following a rout that began on Friday. 

The Dow Jones Industrial Average declined 19.42, or less than 0.1 percent, to 24,893.34. The index fell in the last half-hour of trading after rising earlier in the session. The S&P 500 index fell 13.48, or 0.5 percent, to 2,681.66. The tech-heavy Nasdaq Composite index slipped almost 1 percent.

The Dow fell sharply on Friday and Monday, erasing the market's gains for 2018. On Tuesday, stocks opened sharply lower before recovering slightly and rebounding in late trading. 

The volatile trading session on Tuesday followed a two-day rout that wiped out the year's gains. Investors and analysts are speculating whether the market's wild ride indicates the beginning of a correction, which is a decline of 10 percent, or may be a temporary pullback. The decline was overdue, according to David J. Kostin, chief U.S. equity strategist, at Goldman Sachs.

"History suggested the S&P 500 was overdue for a pullback: 404 trading days had elapsed since the market last experienced a 5 percent drawdown, the longest stretch of time in nearly 90 years!" Kostin wrote in a research note earlier this week. "Since 1929, pullbacks of 5 percent have occurred after 92 days, on average."

In global markets, France's CAC 40 rose 0.5 percent to 5,187.38 in early trading, while Germany's DAX added 0.6 percent to 12,470.39. Britain's FTSE 100 surged 0.8 percent to 7,200.85. 

Japan's benchmark Nikkei 225 index surged as soon as trading began, but gave up its initial gains as the yen strengthened against the dollar. It ended the day up only 0.2 percent at 21,645.37. The benchmark had tumbled as much as 7.1 percent on Tuesday before regaining some lost ground to close 4.7 percent lower.

In South Korea the Kospi, which saw only modest losses on Tuesday, fell back to close 2.3 percent lower at 2,396.53 as investors fretted over whether the U.S. Federal Reserve will tighten monetary policy.

"It means that there are more investors with a negative view on the market in the long term," said Oh Hyun-seok, a market analyst at Samsung Securities. "South Korean markets started higher in the morning but investors are more worried that U.S. markets will see further sell-offs tonight."

Also Wednesday, Australia's S&P/ASX 200 gained nearly 0.8 percent to 5,876.80. Hong Kong's Hang Seng slipped 0.9 percent to 30,323.20, while the Shanghai Composite lost 1.8 percent to 3,309.26 on heavy selling of banks and insurers.

It's unclear if the global markets are really moving in "lockstep," as some observers have suggested, but uncertainty abounds.

"While today would be crucial in seeing if the bulls can wrestle back control for Asian markets, it does appear that we have finally entered a period of increased volatility," says Jingyi Pan, market strategist at IG in Singapore.

"This increased volatility had been one that the market was anticipating at the start of the year, but certainly took its time to arrive and may retain a spot in the market after this week's tumultuous turn."

The large share of foreign trading activity in Japan and some other regional markets raised the likelihood that losses seen in the U.S. may spill over into other regions. That's less true for China, whose financial markets are more cloistered from international investors.

U.S. markets started lower after major indexes in Asia and Europe sank Tuesday, but a late surge helped them regain almost half the losses from their biggest plunge in six and a half years the day before.

U.S. President Donald Trump, who has tweeted frequently about the stock market's strength in his first year in office, tweeted on Wednesday that the market's recent drop was a "Big mistake:"

The Dow Jones industrial average lost 567 points right after trading began but eventually gained 567 points, adding 2.3 percent to 24,912.77. The Standard & Poor's 500 index, a broader market barometer tracked by many index funds, climbed 1.7 percent to 2,695.14. The Nasdaq composite rose 2.1 percent to 7,115.88.

Steep declines on Friday and Monday wiped out the gains the Dow and S&P 500 had made since the beginning of the year. But the Dow is up 24 percent in the past 12 months and the S&P 500 has gained 18 percent.

After Tuesday's rebound the S&P 500 is still down 6.2 percent from the record high it set on January 26. That's less than the 10 percent seen as a correction. Corrections are seen as entirely normal and even helpful in curbing excessive gains during bull markets. The last market correction ended almost two years ago.

Investors remain fearful that signs of rising inflation and higher interest rates could stifle the bull market that has pushed stocks to record high after record high in recent years.

Also Wednesday, U.S. crude oil added 29 cents to $63.68 a barrel in electronic trading on the New York Mercantile Exchange. It fell 76 cents, or 1.2 percent, to close at $63.39 a barrel in New York Tuesday. Brent crude, the benchmark for international oil prices, rose 25 cents to $67.11 a barrel in London.

In currency trading, the dollar fell to 109.02 yen from 109.54 yen late Tuesday. The euro slipped to $1.2372 from $1.2377.

On Monday, the Dow finished down 4.6 percent, the biggest decline in percentage terms since August 2011, when investors were fretting over Europe's debt crisis and the debt ceiling impasse in Washington that prompted a U.S. credit rating downgrade.