Stocks: Regaining composure after plunge

June 21, 2013: 9:14 AM ET
S&P 500 futures 9:11
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NEW YORK (CNNMoney)

Stock markets regained some composure early Friday in the wake of a massive two-day global sell-off.

U.S. stock futures rose between 0.2% and 0.3% as investors catch their breath in the wake of Federal Reserve chairman Ben Bernanke's remarks that the central bank may start winding down its stimulus policies later this year.

Wall Street closes out the week coming off the worst day for U.S. stocks of 2013. The Dow Jones industrial average fell 2.3% Thursday, while the S&P 500 sank 2.5%.

But stocks have still made significant gains this year. All three major U.S. indexes are up by between 11% and 13% since January.

The Fed has been a major driver of the bull market over the past few months as it has injected liquidity into the markets. Traders say the coming shift in monetary policy will make for volatile markets in the months ahead.

The CBOE Market Volatility Index (VIX) surged 23% Thursday.

Related: Fear & Greed Index firmly in extreme fear

U.S. government bond yields also remain at elevated levels. The 10-year Treasury yield was at 2.42% Friday morning.

Investors have been bailing out of bonds and sending yields higher over the past month amid speculation that the Fed will soon taper its monthly bond purchases, known as quantitative easing.

European stock markets bounced back in morning trading, with London's FTSE leading the major indexes with a rise of nearly 1%.

Meanwhile, Asian markets ended with mixed results.

Japan's Nikkei index posted a 1.7% bounce, closing the week with a gain of 4.3%.

Related: Don't panic! Selling now could hurt your nest egg

But Chinese stocks continued to head lower as investors worried about tighter liquidity conditions across the country and a slump in manufacturing activity.

Nomura said Chinese government policies seem to be the reason for the cash crunch.

"Since mid-March, the government has introduced a series of tightening measures in the shadow banking sector to contain financial risks," it said in a research note.

"The People's Bank of China could have reacted and injected liquidity through open market operations. Its decision not to intervene shows that it is committed to tightening the policy stance."

Related: U.S. dollar headed for 'multi-year rally'

As for corporate news, shares of Facebook (FB) rallied Friday, one day after the social media giant rolled out its Instagram video product.

Darden Restaurants (DRI), which operates chains including Red Lobster and Olive Garden, reported earnings that missed estimates, but a slightly better-than-forecast revenue increase.

Oracle (ORCL) shares plunged 8% in premarket trading after the tech giant reported quarterly earnings and sales that missed expectations.

Shares of CarMax (KMX) soared after the auto retailer reported better-than-expected quarterly profits.

Inflight wireless company Gogo (GOGO) will begin trading Friday with shares priced at $17, the high end of its range.

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