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Stocks Trim Weekly Losses With Friday Gains

U.S. stocks ended higher Friday after a punishing week of losses across major indexes. 

Traders welcomed the reprieve from the brutal spring selloff that has left virtually no corner of the market unscathed. This week brought several shocks for the market. Data showed inflation is still running hot, disappointing investors. Cryptocurrencies swooned after a so-called stablecoin unexpectedly crashed. The S&P 500 on Thursday flirted with bear market territory, a level 20% lower than a recent high, and the Dow Jones Industrial Average posted weekly losses for the seventh consecutive week, its longest losing streak in more than 20 years.

The Nasdaq Composite jumped 3.8% as of 4 p.m. ET, while the S&P 500 gained 2.4% and the Dow industrials rose 466 points, or 1.5%. All three indexes were down from highs seen earlier in the session.

The moves higher followed a late-session rally Thursday that helped the Nasdaq Composite eke out a gain. Risk-on sentiment carried into international stock markets overnight. By Friday morning in the U.S., investors were scooping up shares of beaten-down technology companies before the opening bell. 

Still, traders and investors were unwilling to call a bottom.

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“Will this week be the low for the year? I doubt it,” said

Andrew Slimmon,
senior portfolio manager at Morgan Stanley Investment Management. “I wouldn’t be surprised if we get a deeper growth scare sometime this summer.”

Investors are currently confronting issues not seen in decades as inflation continues to hover near a four-decade high. Many traders believe a recession is increasingly likely as the Federal Reserve attempts to get pricing pressures under control. Many institutional and individual investors alike have begun to discount the idea that the Fed can engineer a so-called soft landing, during which inflation falls but unemployment stays low and the economy keeps growing.

Though Mr. Slimmon said he believes there is more short-term pain in store for stocks, he remains optimistic in the longer term, and said he thinks the market will rebound by the end of the year, citing some fairly upbeat earnings reports. More than three-quarters of S&P 500 companies have reported a positive earnings-per-share surprise for the first quarter, in line with prior quarters, according to FactSet.

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“I spend a ton of time talking to companies and listening to company conference calls, and what I can tell you is I don’t hear collectively the weakness out of companies that I’m seeing in the stock market,” said Mr. Slimmon said. 

On Thursday, Fed Chairman

Jerome Powell
acknowledged that getting inflation under control could create a short-term hit to the economy, saying on the Marketplace radio program that “the process of getting inflation down to 2% will also include some pain.”

He repeated his view that further half-percentage point increases would likely be appropriate at coming meetings, but said the central bank could consider larger increases if economic data necessitate such steps.

This week’s inflation report offered little solace to investors, especially after data showed that price pressures were largely broad based. Even as gasoline prices eased, prices rose for groceries as well as dining out, airline travel and other services, spooking investors who had hoped that inflation had peaked. 

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That forced many to sell off riskier investments and pile into assets perceived as safer. Growth and technology stocks, which are typically hurt by higher interest rates, in particular were walloped. But the risk-off sentiment rippled elsewhere, leading to sharp plunges in cryptocurrencies, too. 

“This week was like a pivot in the markets. The mood has changed from evaluating if we can live in an economy with higher rates to [investors] asking: ‘Are we on the brink of a recession?’ ” said

Florian Ielpo,
head of macro at Lombard Odier Investment Managers. 

On Friday, however, technology stocks were among those that led the rebound.
Nvidia
added 9.5%,
PayPal
advanced 6.1% and
Netflix
gained 7.65%. The S&P 500’s information technology segment was recently up 3.45%.

Twitter
shares fell 9.7% after
Tesla
Chief Executive
Elon Musk

tweeted that his deal to buy the social-media company and take it private is “temporarily on hold” pending details on the amount of fake accounts on the social-media platform. Mr. Musk later tweeted that he was committed to the acquisition, helping Twitter trim premarket losses of more than 20%. Tesla shares were recently up 5.7%.

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Twitter CEO

Parag Agrawal
on Friday said “while I expect the deal to close, we need to be prepared for all scenarios,” a day after he internally announced a hiring freeze and cost cuts.

Robinhood
surged 25% after

Sam Bankman
-Fried, the founder of the cryptocurrency exchange FTX, disclosed he bought a 7.6% stake in the brokerage.
Duolingo
jumped 34% after the language-learning platform reported a sharp jump in revenue and monthly active users.

Energy stocks were some of the biggest gainers Friday, rising along with the price of oil. Brent, the global crude oil benchmark, rose 3.8% to $111.55. Oil prices ticked lower this week, but remain up more than 40% since the start of the year.

Bitcoin climbed to just above $30,000 on Friday, from its 5 p.m. ET level of $28,572.24 on Thursday. Elsewhere in the cryptocurrency markets, the beleaguered stablecoin TerraUSD continued to spiral lower, trading at 11 cents. TerraUSD broke its typical peg to $1 last weekend following a wave of selling of the token. Its sister token Luna also has fallen precipitously this week, trading at half a penny, down from more than $60 on Monday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note climbed to  2.932%, from 2.815% Thursday, reversing a four-day yield slide that came as investors piled back into bonds. Yields climb when bond prices decline.

Overseas stock markets also traded higher Friday. In Europe, the pan-continental Stoxx Europe 600 climbed 2.1%. In Asia, Hong Kong’s Hang Seng added 2.7%, while Japan’s Nikkei 225 jumped 2.6%. The Shanghai Composite gained 1%.

—Caitlin Ostroff contributed to this article.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Corrie Driebusch at corrie.driebusch@dowjones.com

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