U.S. stocks ended another wild day of trading mostly unchanged, rebounding from an early 200-point plunge on the Dow that was sparked by fears of a global slowdown.
The big comeback was triggered by a Federal Reserve official who suggested the central bank could abandon its plan to pull away the easy money punch bowl that's been juicing stock prices for years.
"The market loves free money. If the Fed wants to print it, we go higher. Don't fight it," said Joe Saluzzi, co-head of trading at Themis Trading.
Fed officials are clearly taking notice of the extreme turbulence that has hit the markets in recent days due to fears about Europe's economy, the Ebola outbreakand plunging oil prices. Just look at Wednesday, when the Dow plummeted as much as 460 points but ended the day down "only" 173 points.
The wave of selling over the past month has left all three major indexes flirting with their first "correction" in years.
The Nasdaq briefly hit correction territory on Thursday, signaling a 10% decline from a previous closing high. But it's since bounced back from those levels.
Despite closing off its lows, the Dow did fall 25 points Thursday. That means it's closed lower for six days in a row for the first time since August 2013. The S&P 500 ended virtually unchanged.
Fed to the rescue? The bulls on Wall Street launched their comeback after James Bullard, president of the St. Louis Fed, told Bloomberg News the Fed should weigh delaying the end to quantitative easing, or QE. The bond-buying experiment that has helped send stocks to record highs and had been poised to end this month.
A decision by the Fed to keep the program going would represent a big 180 and a positive for stocks and other risky assets that have benefited from the stimulus.
"This big flip flop from the guy I refer to as 'the Godfather of QE' is a game changer," Michael Block, chief strategist at Rhino Trading Partners, wrote in a note to clients. "This is a powerful signal that the Fed remains accommodative and is concerned with asset prices and volatility enough to consider the seemingly unthinkable step of continuing and even growing QE from current levels."
Wall Street will be listening very closely to Fed chief Janet Yellen's speech Friday morning. Signs that she is worried about the recent economic developments could give stocks a further boost.
Not all gloom & doom: Besides more magic from the Fed, stocks received support from a number of positive U.S. data points.
There's fresh evidence the job market is getting healthier. Claims for first-time unemployment benefits tumbled last week to the lowest level since April 2000.
"I think it speaks loudly about the sturdiness of the labor market. That's the underpinning of a self-sustaining economic recovery," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
The better economic headlines may have helped boost crude oil, which took a break from its month-long plunge to close over 1% higher.
That was good news for the beaten-down energy sector of the stock market, which was actually the best performer on the day. So was a $5.4 billion sale of wells by Chesapeake Energy (CHK), which surged 17%.
Also, a number of major companies reported quarterly earnings that exceeded expectations. Shares of Delta Air Line (DAL)s and UnitedHealth (UNH) rallied on their earnings beats. Delta soothed Ebola jitters by saying it's not seeing a drop in demand due to the deadly virus.
European jitters persist: The early selloff was fueled by more worries about European growth, which has slowed to a near halt. Some countries, including even economic powerhouse Germany, are teetering on the brink of recession.
Markets in France and Germany retreated and the U.K.'s FTSE 100 tumbled nearly 3%. Virtually all European markets are now in correction territory.
New problems are also emerging in the high-debt nations on Europe's periphery. Greece's stock and bond markets have been in free fall this week and Spain held a bond auction that failed to meet its target.
Authored by Matt Egan @mattmegan5 via cnnmoney.com.
The Dow plunged as much as 370 points Wednesday morning before pulling back a bit, although a 150 point loss isn't anything to cheer. There wasn't an obvious trigger. Ebolaand Europe's sour economy are clearly worrying. Earnings have been so-so, and retail sales data out this morning was disappointing.
October has been a brutal month, erasing most of the 2014 stock market gains. The Dow is negative for the year, and CNNMoney's Fear & Greed Index is showing extreme fear.
Most investors are better off not obsessing about the day to day market moves.
But if you're keeping an eye on the numbers, here are three critical stats to watch. There is no "magic number" that triggers a sell-off, but these indicators would be big red flags.
1. We're near a correction, but not there yet
Only a month ago, the S&P 500 index closed at an all-time high of 2,011. At its worst point Wednesday morning, the index was down around 8.7% since then. That's rough, but it's not the 10% drop that would constitute a true correction, let alone the 20% drop that would signal a bear market.
Keep an eye on this number: 1,810. If the S&P 500 slips below that, we're in a correction. As of Wednesday morning, we were around 1,850.
(For those who like numbers, at the nadir of the financial crisis in March 2009, the S&P 500 closed below 700).
2. Volatility is back, but it's still a breeze, not a gale force wind.
The VIX volatility index is currently at about 23.Most days the stock market moves a little bit higher or lower. For instance, the S&P 500 moved less than 0.2% on Tuesday. But since the end of October, the stock market has had numerous "wild swings" where it shifts more than 1% (or even more than 2% in some cases).
That's referred to as volatility. The VIX Index is the main measure of volatility. It has spiked about 90% in the past month -- a huge jump. But even so, the VIX currently stands at about 26 (it hit as high as 28 Wednesday morning). That's a lot higher than the 12 to 13 it was at a month ago, but it's yet to hit the 30 mark, which is the unofficial alarm bell.
3. Investors are putting money into bonds, but it's not a total freak out yet
When investors get scared, they don't run to mom, they run to bonds, especially U.S. government bonds. The yield on the 10-year Treasury is a good indicator of just how many people are seeking the safe arms of the bond market.
When the yield falls, you know people are gobbling up bonds.
In the middle of September, the yield on the 10-year Treasury was around 2.6%. On Tuesday it was at 2.2%. That's a quick drop, but the real indicator of a meltdown would be for the yield to drop to 2% or even below.
Sure enough, on Wednesday, the yield fell below that mark briefly, but it has since moved back above the 2% level.
The last time that happened was in 2012 when Europe was in the midst of a debt crisis and America's economic recovery was looking uncertain.
Market jitters are back, but we're not quite at a "correction" yet.
Editor's note: This story was updated Wednesday at 10am ET.
Authored by Heather Long via cnnmoney.com.