Dow snaps 3-week losing streak, Procter & Gamble surges

  • The Dow rises 0.4 percent this week, notching its first weekly gain in four.
  • The 30-stock index's gains on Friday are led by Procter & Gamble's biggest one-day surge in a decade.
  • Stocks remain down sharply for the month, however, as worries about rates and the global economy persist.
  • "The market is not going to have an immediate recovery; it tends to bounce," says Quincy Krosby of Prudential Financial.

The Dow Jones Industrial Average rose on Friday on the back of strong earnings from Procter & Gamble as Wall Street tried to regain its footing after a sharp sell-off in the prior session.

The 30-stock index climbed 64.89 points to 25,444.34, led by a 8.8 percent surge in Procter & Gamble shares, their biggest since Oct. 28, 2008. The Dow also posted its first weekly gain in four, climbing 0.4 percent in that time. Procter surged after reporting better-than-expected earnings. The company said it got a boost from strong beauty-product sales.

Honeywell and Schlumberger also reported better-than-forecast profits. American Express, PayPal and Skechers all posted on Thursday earnings that topped analyst expectations. Their shares rose 3.8 percent, 9.4 percent and 13.8 percent, respectively.

The corporate earnings season is off to a strong start. With more than 15 percent of S&P 500 companies having reported, 83 percent have topped analyst expectations, according to FactSet.

The S&P 500 closed just below the flatline at 2,767.78, however, as declines in health care and consumer discretionary offset a 2.3 percent gain in consumer staples. The Nasdaq Composite fell 0.5 percent to 7,449.03 as Facebook, Amazon and Netflix all pulled back.

"The underpinnings of the economy are still in place and earnings are still good," said Quincy Krosby, chief market strategist at Prudential Financial. "The market is not going to have an immediate recovery; it tends to bounce."

Traders work on the floor of the New York Stock Exchange, (NYSE) in New York.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange, (NYSE) in New York.

These moves follow a sell-off on in the previous session as investors worried about rising rates, geopolitical tensions and a potential slowdown in the global economy.

"The rising rates, rising volatility and the moves in currencies were a wake-up call" for investors, said Gibson Smith, founder of Smith Capital Investors. "Earnings should be supportive of stocks," but the market is entering a period where it is "realizing the economy is in stronger footing."

On Thursday, the Dow dropped more than 300 points, following a plunge in Chinese equities. History shows that, when stocks plunge in China, the U.S. market is rarely immune as large exporters suffer.

Overnight, China said its economy grew by 6.5 percent in the third quarter, missing expectations. Chinese equities surged, however, as officials took steps to support the market, and that was helping sentiment in the U.S.

Stocks are down sharply for the month.The Dow and S&P 500 have fallen more than 3 percent each in October, while the Nasdaq is down more than 7 percent.

"This whole thing started a few weeks ago when [Federal Reserve] Chairman Jerome Powell said we're a long way from neutral," said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. "What we're seeing here is a good old fashion valuation repricing."

Schutte added these recent pullback is a buying opportunity for investors.

—CNBC's Spriha Srivastava contributed to this report.