The 30-stock index traded 350 points higher after rising 414 points at its session highs.The Dow briefly turned negative in midday trading before bouncing back. The S&P 500 also rose sharply. As of 3:58 p.m. ET, it was up 1.6 percent. The Nasdaq Composite traded more than 2 percent higher.
"I don't see evidence of what you'd like to see in a bottom," said Willie Delwiche, investment strategist at Baird. He noted markets tend to bottom after more signs of capitulation and widespread panic, which we haven't seen thus far.
Gains in tech shares like Netflix and Amazon initially led the major indexes to sharp gains. Netflix gained 4.3 percent, while Amazon climbed 2.6 percent.
Sentiment overseas also helped at the start of the day as international markets rose. The Shanghai Composite surged 0.9 percent and Japan's Nikkei 225 gained 0.5 percent. European equities also rose initially before closing lower on the day.
Michael Nagle | Bloomberg | Getty Images
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, on Friday, Oct. 12, 2018.
On Thursday, Wall Street closed sharply down, with the Dow falling over 540 points, bringing its two-day losses to more than 1,300 points. Sentiment was rocked around the globe in recent sessions, as investors grew nervous over the rise in interest rates and high valuations in tech shares.
President Donald Trump has recently criticized the U.S. Federal Reserve for the decline in stock markets, saying Wednesday that he wasn't happy with how the central bank continued to raise interest rates.
Stocks have also fallen this week as tech — the biggest S&P 500 sector by market cap weight — has lost nearly 6.8 percent through Thursday's close. These losses have sent the major indexes down more than 5 percent, on pace for their biggest weekly declines since March.
The Dow and S&P 500 are both down nearly 5 percent this week while the Nasdaq has lost 4.6 percent.
The Cboe Volatility index (VIX), widely considered the best gauge of fear in the market, hit its highest level since February this week. It traded at 25.18 on Friday, up about 70 percent.
"There are two things you should do in these situations. First, make a portfolio inventory. Figure out what you own and why you own it," said John Augustine, chief investment officer at Huntington Private Bank. "The second is make a shopping list."
He noted the volatility will likely continue through the current earnings season.
Wells and Citigroup both reported better-than-expected earnings, along with J.P. Morgan Chase, to kick off the third quarter earnings season. Expectations for this earnings season are high. Analysts polled by FactSet expected S&P 500 earnings to grow by 19 percent.
"With the earnings that came out, you'd think the market would be stronger," said Mark Esposito, CEO of Esposito Securities. He added the market still has room to run higher but noted: "The last two days may foreshadow what we could see at the end of the cycle."