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Dow Posts Worst Week Since Oct. 2008

Stocks closed modestly higher in a choppy session Friday as investors snapped up beaten-down sectors following the previous session's steep selloff, but ended sharply lower for the week amid ongoing worries over a global slowdown.

The Dow Jones Industrial Average eked out a gain of 37.65 points, or 0.35 percent, to finish at 10,771.46, led by BofA.

The S&P 500 gained 6.87 points, or 0.61 percent, to end at 1,136.43. The Nasdaq climbed 27.56 points, or 1.12 percent, to close at 2,483.23.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished above 41.

For the week, the Dow tanked 6.41 percent, the S&P plunged 6.54 percent, while the Nasdaq tumbled 5.30 percent. Intel was the biggest gainer on the blue-chip index for the week, while Alcoa led the decliners.

All 10 S&P sectors finished in the red for the week, led by materials.

“This continues to be a really data-driven market. There’s still not much in terms of a framework for resolving long-term issues and when you don’t have a long-term framework, you react to the latest data point,” Vadim Zlotnikov, chief market strategist of Alliance Bernstein told CNBC. “If you have any horizon beyond a couple of weeks, these cyclical stocks and volatile stocks are the cheapest they’ve been in almost 40 years.”

Stocks declined heavily throughout the week as investors were cautious over the Fed's grim outlook in addition to ongoing economic jitters that fueled concerns of a recession.

Despite the recent downturn, some strategists remain positive.

“There are two things driving the market: fundamentals and global risks,” said Doug Cote, chief investment strategist of ING Investment Management. “Fundamentals like corporate earnings have been very powerful and they’ve stayed on track all year despite slowing global growth and we expect that to continue…So fundamentals drive the market until there’s great breach on risk—when that happens, the global risk moves to the frontlines.”

Despite the recent “breaches” such as worries over the euro zone and political debates in the U.S., Cote said investors should remain diversified in the markets as long as fundamentals are positive.

“I think we get past this and will get effective policy action,” Cote said.

And Art Cashin, director of floor operations at UBS Financial Services, suggested investors may see a "massive rally" soon.

Under pressure from investors to show action, finance ministers and central bankers from the G20 said they would take all steps needed to calm the stresses wracking the global financial system.

Commodities tumbled sharply with gold plummeting $101.90, almost 10 percent, to settle at $1,639.80 an ounce. Silver plunged to log its biggest one-day decline ever.

Morgan Stanley led the major banks higher as analysts said that worries over the bank's exposure to French financials were exaggerated. Other large bank stocks recovered from the recent market selloff including Citigroup and Bank of America . Still, financials are the top sector laggards, down almost 30 percent year-to-date.

Hewlett-Packard named former eBay chief Meg Whitman as its new President and CEO, replacing the harshly criticized Leo Apotheker in a bid to restore investor confidence in the IT giant. Meanwhile, Goldman slashed its price target on H-P to $24 from $30.

McDonald's announced a quarterly cash dividend increase by almost 15 percent to 70 cents a share.

Facebook unveiled new ways for users to listen to music and watch TV, as it attempts to make media an integral part of its social networking service. The media push comes as Facebook faces fresh competition from Google's Google+.

Amazon edged slightly higher after the online retailer announced a special event for Sept. 28. While the purpose of the event was not disclosed, the firm may be launching its long-rumored tablet, according to AllThingsD.

And on the earnings front, Nike climbed after the sports apparel maker beat earnings and sales expectations, helped by strong revenue and price increases.

Meanwhile, KB Home posted a wider-than-expected quarterly loss as home deliveries declined by almost a third.

Meanwhile, PNM Resources said it plans to sell Texas-based electricity provider First Choice Power to Direct Energy for $270 million, as it looks to return to its core pure-play electric utility business.

Meanwhile, the EU is planning a Greek debt buyback program, according to a report, citing a EU planning document. According to the document, the operation would be open to all investors and include all of Greece’s outstanding government bonds.

Earlier, Moody's downgraded the ratings of eight Greek banks by two notchesciting a struggling domestic economy and declining deposits among reasons for the move.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC

Coming Up Next Week:

MONDAY: Chicago Fed nat'l activity index, Fed's Bullard speaks, new home sales, Dallas Fed mfg survey, Obama LinkedIn town hall
TUESDAY: S&P/Case-Shiller home price index, consumer confidence, Fed's Lockhart speaks, 2-yr note auction; Earnings from Walgreens
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction; Earnings from Darden Restaurants
THURSDAY: GDP, jobless claims, Fed's Rosengren speaks, corporate profits, pending home sales, 7-yr note auction, farm prices; Earnings from Micron
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment, Fed's Bullard speaks

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