NEW YORK — Stocks on Wall Street ended a volatile week on an upswing, as the Standard & Poor's 500 index ended Friday's trading session about 1.4 percent higher.
After Thursday's session marked a 10 percent drop from the market's peak in January, the S&P 500 and Dow Jones industrial average started Friday higher, then plummeted, then swung back into positive territory in the afternoon.
Asian and European markets tumbled Friday. Chinese stocks were among the biggest casualties in a broad sell-off across Asia. It was a stunning reversal for Chinese shares, which investors had been snapping up only days before.
The cause of one of the most turbulent weeks in recent memory, market participants in the United States said, appeared to be widespread expectations that the global economy is improving and that growth would accelerate in the near future.
That has led to fears that interest rate increases could cheapen the value of certain kinds of investments.
"Even if stocks continue to rise, they could rise more slowly and could be subject to large drops," said Kate Warne, an investment strategist at Edward Jones.
She said investors were moving money out of riskier stocks like Apple and Disney, which are considered "consumer discretionary" stocks because they don't serve basic daily needs, and into safer areas like utility stocks and U.S. Treasury notes.
"Longer-term investors should stay invested and not let this worry them. This is an opportunity to buy at lower prices," Warne said.
Many investors are now growing nervous that central banks will raise interest rates in a bid to keep inflation at bay. If policymakers move too quickly, their efforts could temper the global growth.
Anthony Clemente, chief executive of Canaras Capital, which specializes in high-yield loans and has $1.3 billion under management, said some of the market movement appeared to be an effort by portfolio managers to protect themselves from volatility in stocks rather than a broader fear of market turmoil.
"It's really out of equities and inflows into the debt markets," he said. "There's an expectation that yields — fixed income and debt instrument — are the place where you will want to be at some point."
Whatever the cause, there is now little doubt that markets are jittery.
After being lulled into a sense of complacency by years of steadily rising stocks, even small worries can snowball into a bad day for stocks. The losses can then feed on themselves in a financial industry dominated by computerized trading systems, with weakness in the United States spreading around the world.
"Asia is going to be the tail that gets wagged by the U.S. dog," Timothy Moe, chief Asia Pacific strategist at Goldman Sachs, said Friday.
As with stocks in the United States, Chinese shares have surged in recent months, on the back of a strong economy. An improved global outlook has led to more buying of Chinese exports. The authorities also seem to have slowed what had been an alarming borrowing binge.
But the Chinese market does offer reasons for concern. Investors kept a careful eye this week on China's currency, the yuan, which is carefully managed by the Chinese government. It took a hit Thursday, falling as much as 1.2 percent before strengthening a bit Friday.
Before that, the yuan had been rising steadily against the U.S. dollar, leading to worries that Beijing might step in further to contain it. World markets can be sensitive to sharp swings in China's currency.
The tough day of trading Friday put Chinese shares by some measures into correction territory.
"We are witnessing the longest rally in the history of Chinese stocks," analysts at Goldman Sachs wrote to clients early this week, adding, "A tactical correction appears overdue, and markets could fall further."
Shares in Shanghai fell about 4 percent Friday, while Hong Kong shares lost 3.1 percent. Shares in Tokyo fell 2.3 percent. In Europe, stocks wavered, off more than 1 percent in afternoon trading.
In the logic of stock markets, bad news can sometimes be good news. Recent gains in the value of the euro against the dollar and other major currencies were expected to slow exports and potentially put the brakes on the eurozone economy.
Slower growth would, in turn, dissuade the European Central Bank from raising interest rates too soon, prolonging the cheap money that has been partly responsible for the bull market.
"The ECB has, in fact, a vital interest in keeping euro area interest rates at low levels," Ralph Solveen, an analyst at Commerzbank, said in a note to clients Friday.
Jack Ewing contributed reporting from Frankfurt, Germany.