(RTTNews) - Stocks experienced another volatile trading session on Friday, as traders continued to express concerns about the outlook for the global economy as a result of the current credit crisis. The major averages showed big swings throughout the session, eventually ending the day mixed.

Amid worries about the economy and disappointing earnings from General Electric (GE), stocks moved sharply lower at the start of trading. The Dow fell nearly 700 points at the open, pulling back below the 8,000 level for the first time since early 2003.

Selling pressure waned not long after the open, however, with some analysts suggesting that the markets are close to a bottom following the significant weakness seen in recent sessions. Stocks subsequently staged a substantial rebound, lifting the major averages into positive territory.

While stocks moved back to the downside shortly afterward, the markets staged a late-day recovery, lifting the major averages back above the unchanged line. The upward move was attributed to optimism about what will come out of this weekend’s meeting of G7 financial officials.

The meeting of finance ministers and central bankers will focus on the possible approaches various countries can take to alleviate a growing global credit freeze, propping up banks and financial institutions faltering under the weight of mortgage-backed securities that have plunged in value since the U.S. subprime mortgage collapse.

In an interview with RTT News, Ron Kiddoo, chief investment officer at Cozad Asset Management discussed the market’s wild ride on Friday and predicted that a bottom won’t occur until we get “some sort of stability in the financial markets.”

However, Kiddoo called stocks “very cheap” at current levels and says he is “buying judiciously” regardless. In addition, Kiddoo said he “still has faith in this market,” adding that he believes “things will be brighter” after the election.

The volatility in the markets was represented by a substantial gain by the CBOE’s VIX Volatility Index, which ended the session up 9.4 percent. The index ended the day well off its high for the session, but it still set a record closing high.

While the Nasdaq managed to close in positive territory on the late-day rally, the Dow and the S&P 500 slid back into the red. The Nasdaq closed up 4.39 points or 0.3 percent at 1,649.51, while the Dow closed down 128.00 points or 1.5 percent at 8,451.19 and the S&P 500 closed down 10.70 points or 1.2 percent at 899.22.

The major averages also showed substantial losses for the week, with the Dow and the S&P 500 setting new five-year closing lows. The Dow posted a weekly loss of 18.2 percent, and the Nasdaq and the S&P 500 fell 15.3 percent and 18.2 percent for the week, respectively.

Sector News

Despite the volatility in the broader markets, resource stocks remained under pressure for much of the trading session. The weakness in the sector came as commodities prices plunged amid concerns about slowing worldwide demand.

Significant weakness was visible among oil service stocks, as reflected by the 10 percent loss posted by the Philadelphia Oil Service Index. With the loss, the index ended the session at its worst closing level in over three years.

The losses by oil service stocks came amid a substantial decrease by the price of oil, which pulled back further off the record highs seen earlier this year. Crude for November delivery closed down $8.89 at $77.70 a barrel, a one-year closing low.

Gold stocks also posted particularly steep losses, contributing to a 12.7 percent loss by the Amex Gold Bugs Index. After reaching an intraday high $936.30 an ounce, gold for December turned sharply lower, closing down $27.50 at $859 an ounce.

Outside of the resource sector, disk drive stocks turned in some of the market’s worst performances, with the Amex Disk Drive Index closing down. Imation (IMN) helped to lead the sector lower after forecasting a third quarter operating loss.

Several other major sectors indices also ended the day lower, although most ended the day well off their lows. Some utilities, biotechnology, and defense stocks posted notable losses.

On the other hand, the steep drop by the price of oil contributed to significant weakness in the oil-sensitive airline sector. The Amex Airline Index closed up 11.3 percent after closing lower in the six previous sessions and ending Thursday’s trading at a nearly three-month closing low.

Considerable strength also emerged in the banking sector, as reflected by the 8.5 percent gain posted by the KBW Bank Index. With the gain, the bank index also bounced off a nearly three-month closing low set in the previous session.

Among banking stocks, Wachovia (WB) turned in a particularly strong performance, closing up 43.1 percent on the heels of news that Wells Fargo & Co. (WFC) will proceed with its acquisition of the company.

Several other sectors also moved back to the upside in the latter part of the trading day, with significant strength visible among real estate, housing, and chemical stocks.

Dow Components

As was the case with the broader markets, the Dow components also saw substantial volatility over course of the trading day. A majority of the blue chip stocks ended the day in the red, contributing to the loss posted by the Dow.

Reflecting the weakness in the resource sector, Alcoa (AA) turned in one of the Dow’s worst performances. The aluminum producer closed down 9.7 percent, ending the session at its worst closing level in over thirteen years.

Earlier this week, Alcoa said that its third quarter earnings fell from last year, hurt by sharply lower aluminum prices, higher costs, softening global demand and a restructuring charge for the temporary curtailment of a Texas smelter.

Oil giants Chevron (CVX) and Exxon Mobil (XOM) also posted substantial losses as a result of the steep drop by the price of oil. Shares of Chevron closed down 9.6 percent, while shares of Exxon Mobil fell 8.3 percent.

Other Dow components that posted notable losses include Boeing (BA), Coca-Cola (KO), and Hewlett Packard (HPQ).

On the other hand, some financial stocks within the Dow posted strong gains, including JP Morgan (JPM), Citigroup (C), and Bank of America (BAC). Shares of General Electric also showed a strong upward move, closing up 13.1 percent.

The gain by GE came even though the company reported third quarter earnings that fell year-over-year due in large part to weakness in the conglomerate’s financial business. GE reported earnings of $0.43 per share compared to $0.54 per share in the same quarter last year.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw considerable weakness on Friday, as traders expressed concerns about the outlook for the global economy. Japan’s benchmark Nikkei 225 index ended the session down 9.6 percent.

The major European markets also showed steep declines. The French CAC 40 index and the German DAX index fell 7.7 percent and 7.0 percent, respectively, while the U.K.’s FTSE 100 index ended the day down 8.9 percent.

Looking Ahead

While the recent credit market woes are likely to remain in focus next week, there are also several key economic reports due to be released. Traders are likely to keep an eye on reports on wholesale and consumer price inflation, retail sales, and housing starts.

Additionally, earnings season will start to pick up steam next week, with Intel (INTC), PepsiCo (PEP), Johnson & Johnson (JNJ), Coca-Cola (KO), JP Morgan (JPM), Southwest Airlines (LUV), and Honeywell (HON) among the slew of companies due to report their quarterly results.

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