U.S. stocks were mostly higher on Friday, a sharp contrast to the plunge they took earlier this week.
The Dow Jones industrial average was up 26 points at 14,785 as of 1:42 p.m. Eastern Daylight Time. That almost seemed like a rally after the Dow's 560-point tumble over Wednesday and Thursday, which wiped out its gains from May and June. The plunge came just three weeks after the Dow hit a record high of 15,409.
The Fed's easy money policies have been a big driver behind the stock market's bull run the last four years. It led to low interest rates that encouraged borrowing for everything from factory machinery to commercial airplanes to home renovations. Now investors have to figure out where to put their money now that they have a better idea of how the Fed's stimulus efforts could end.
Kim Forrest, senior analyst with Fort Pitt Capital Group, a portfolio management firm in Pittsburgh, said the market had the "right reaction" to the news that the Fed would wind down its stimulus if the economy continues to improve, but the move may have been overblown.
"We're getting news that made the market uncomfortable," she said. "We shouldn't be sitting at these highs given the fact that the Fed signaled that someday it's going to take some liquidity off the table. So the reaction is right, the magnitude is probably a little off."
The Standard & Poor's 500 index rose three points to 1,591. The S&P hit its own record high a month ago. The S&P and Dow were moving between slight gains and losses Friday.
The yield on the 10-year Treasury note hit 2.49 percent, up from 2.42 percent late Thursday. It has risen sharply since Wednesday as investors sold bonds in anticipation that the Fed would slow, and eventually end, its bond purchases, if the U.S. recovery continues. The Fed has said it wouldn't hesitate to step up its bond purchases again if the economy weakens.
The yield, which is a benchmark for interest rates on many kinds of loans including home mortgages, is at its highest level since August 2011. On Tuesday, the day before the Fed's announcement, it was 2.19 percent. It hit a low for the year of 1.63 percent on May 3.
Technology shares lagged the market after business software maker Oracle reported disappointing earnings late Thursday. Oracle plunged $2.71, or 8 percent, to $30.50, the biggest drop in the S&P 500 index. Oracle is struggling to adapt as customers shift away from software installed on their own computers toward software that runs remotely.
Oracle's results are a poor omen for business spending on technology. Technology stocks in the S&P index fell 1.8 percent, the second-biggest decline among the 10 industry groups in the index. The biggest declines were in materials stocks, down 2 percent.
The Nasdaq composite index, which is heavily weighted with technology stocks, fell 14 points, or 0.4 percent, to 3,350. Apple, the biggest stock in the index, fell $3.84, or 1 percent, to $412.99. Microsoft fell 10 cents, or 0.3 percent, to $33.39.
The price of gold recovered after plunging the day before. Gold was up $6.30, or 0.5 percent, to $1,292.50 an ounce. Crude oil fell $1.90, or 2 percent, to $93.24 a barrel in New York.
The dollar rose against other currencies as traders anticipated that U.S. interest rates would rise as the Fed winds down its bond purchases.
Among other stocks making big moves:
—Darden Restaurants, which runs Olive Garden and Red Lobster, fell $1.97, or 3.8 percent, to $49.26 after rising expenses hurt its fourth-quarter earnings.
— Spreadtrum Communications jumped $3.98, or 18 percent, after the Chinese smartphone chip maker said its board is considering a buyout offer valued at about $1.39 billion from Tsinghua Holdings.
— Facebook rose 36 cents, or 1.5 percent, to $24.27 after the company said it would add video to its popular photo-sharing app Instagram, following in the heels of Twitter's growing video-sharing app, Vine.
A Fed policy statement and comments from Fed Chairman Ben Bernanke started the selling in stocks, bonds and commodities Wednesday. Bernanke said the Fed expects to scale back its bond-buying program later this year and end it by mid-2014 if the economy continues to improve. The bank has been buying $85 billion a month in Treasury and mortgage bonds, which has made borrowing cheap for consumers and businesses. The program has also encouraged investors to buy stocks instead of bonds.
The S&P 500 is still up 11.6 percent, for the year, not far from its full-year increase of 13.4 percent last year.
Overseas, Japan's Nikkei index rose 1.7 percent, but other Asian markets fell. European markets slipped. France's CAC-40 fell 1.1 percent and Germany's DAX fell 1.8 percent.
The real question will be whether the sell-off continues next week, said Frank Fantozzi, CEO of Planned Financial Services. So far, it's more of an adjustment. "If the flow out of equities starts to increase, this might be the pullback we've been waiting for," he said.