US stocks edge lower early after sharp two-day surge

U.S. stocks drifted between small gains and losses in morning trading Friday, coming off two days of big upswings as the market closes out a wild week.

Stocks fell heavily in the first two days of trading this week on concerns about the health of China's economy. The market then rebounded over the next two days.

Utilities stocks were among the biggest decliners in morning trading Thursday. U.S. oil prices moved sharply higher.

The Dow Jones industrial average fell 30 points, or 0.2 percent, to 16,623 as of 11:17 a.m. Eastern time Friday.

The Standard & Poor's 500 index slipped less than 1 point to 1,986. The Nasdaq composite rose eight points, or 0.2 percent, to 4,820.

"People are taking a little bit of a pause," said Paul Springmeyer, senior portfolio manager at the Private Client Reserve at U.S. Bank. "We're finally winding down here where maybe we're seeing more rational behavior."

Stocks ended sharply higher on Thursday, as investors took advantage of this month's heavy sell-off to add to their holdings. The market got a boost from a strong rebound in China's main stock market index and a report indicating that U.S. second-quarter economic growth was much stronger than initially estimated.

Markets have been volatile since China decided to weaken its currency earlier this month. Investors interpreted the move as an attempt to bolster a sagging economy.

Traders are also jittery about the outlook for interest rates. The Federal Reserve has signaled it could raise its key interest rate for the first time in nearly a decade later this year.

The recent market turmoil has thrown into doubt expectations for a rate increase next month, with most economists now saying it's off the table for now. Fed officials hold their annual meeting at Jackson Hole, Wyoming, this weekend, which will be heavily scrutinized for clues on the rate hike timing.

Sector view: Seven of the 10 sectors in the S&P 500 fell, with utilities stocks sliding the most. The sector fell 0.7 percent. GameStop was down the most among stocks in the S&P 500, losing $2.40, or 5.2 percent, to $43.80.

Icahn effect: Freeport-McMoRan rose 2 percent on news that activist investor Carl Icahn took an 8.5-percent stake in the mining company as it cuts costs due to declining copper prices. The stock added 24 cents to $10.43.

Strong quarter: Big Lots surged 15 percent after the discount retailer reported better-than-expected second-quarter earnings. It also boosted its full-year outlook. The stock rose $6.28 to $48.28.

All about consumers: Investors weighed mixed snapshots of how consumers are faring. The Commerce Department said consumers increased their spending 0.3 percent in July, as wages and salaries made their biggest jump in eight months. Separately, the University of Michigan's latest consumer sentiment index fell to 91.9 this month from 93.1 in July. Even so, the survey also found that Americans remain confident about the U.S. economy and their personal finances.

European markets: Germany's DAX fell 0.7 percent, while France's CAC-40 slipped 0.2 percent. Britain's FTSE 100 rose 0.2 percent.

Asia's day: Most Asian benchmarks ended strongly as the U.S. growth data, which also helped oil prices stage an impressive rebound, gave added encouragement to investors seeking bargains in beaten-down shares.

Japan's benchmark Nikkei 225 index climbed 3 percent, while South Korea's Kospi rose 1.6 percent. Hong Kong's Hang Seng swung into a loss in the final hour of trading, losing 1 percent. Australia's S&P/ASX 200 gained 0.6 percent to 5,263.60. The Shanghai Composite Index in mainland China rose 4.8, adding to its 5.3 percent gain Thursday, its first increase in six days. During the previous five days, it had shed nearly 23 percent.

Bonds and currencies: U.S. government bonds rose, pushing down the yield on the benchmark 10-year Treasury note to 2.15 percent from 2.18 percent on Thursday. The dollar slipped to 121.02 yen from 121.12 in late trading Thursday. The euro climbed to $1.1236 from $1.1242.

Energy: Benchmark U.S. crude rose $1.99, or 4.7 percent, to $44.57 a barrel in New York. The contract posted its biggest one-day gain in six years on Thursday, leaping $3.96, or 10.3 percent, to $42.56 a barrel.

By Alex Veiga, AP Business Writer. Copyright 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

The Gayly – August 28, 2015 @ 11am.