Major U.S. stock averages rebounded Friday, but closed the week in red amid fears of the Federal Reserve pulling back its stimulus.
The Dow Jones Industrial Average gained 225.96 points, or nearly 0.7%, to 35,120.08. The S&P 500 added 0.8% to reach 4,441.67. The tech-heavy Nasdaq Composite rose about 1.2% to 14,714.66.
All three major stock indexes finished the week lower. The Dow dipped 1.1% this week, while the S&P 500 shed nearly 0.6% and the Nasdaq Composite moved 0.7% lower.
"With Fed tapering coming while delta variant keeps spreading, the transition away from liquidity/policy regime to more mid-cycle markets means we may experience a bumpier ride ahead," Barclays equity strategists said in a note. "Market narrative may thus turn more cautious, as concerns about peaking growth rates, delta variant and policy mistake may prove headwinds, at a time when seasonality and technicals are unfavorable."
Technology stocks traded in the green Friday, providing the market with support. Microsoft, Cisco and Salesforce were among the biggest winners in the Dow as investors snapped up tech stocks amid concerns about slowing economic recovery. Chip stocks rose, with Nvidia closing 5.1% higher.
Tesla shares added 1% after Elon Musk's electric car maker had an AI day on Thursday. The company unveiled a new custom chip and plans to build a humanoid robot. The stock was down nearly 5.2% lower for the week as investors worried about growth in China, one of the electric vehicle maker's key markets.
This week, WTI crude oil tumbled more than 9%, taking energy stocks with it. Diamondback Energy and Valero Energy sunk nearly 9.9% and 9.1%, respectively, on the week.
Minutes from the Fed's July meeting released this week showed the central bank is willing to start reducing its monthly asset purchases this year. Investors sold equities and commodities this week and bought bonds on fears the move by the Fed may upend a global economy already under stress by the delta variant.
August trading flows typically bring volatility with mostly lower volume, but the delta Covid variant also looms over markets.
"The spread of the delta variant is weighing on both consumption and productions, and pushing out growth," Goldman Sachs' Chris Hussey said in a note.
Fed officials are set to gather for their annual meeting in Jackson Hole, Wyo., next week. Market participants will be awaiting insights into the Fed's "taper talks" as many central bankers aim to move away from easy policy.
—CNBC's Pippa Stevens and Patti Domm contributed reporting.