North American shares opened down for a third day this week, but financial markets were a lot more calmer on Wednesday, following days of volatile trading and steep losses.
The S&P/TSX composite index was down 0.2 per cent to 15,636 in Toronto.
The benchmark index snapped a six-day losing streak on Tuesday as Wall Street also bounced back near the end of the trading day.
In New York, the Dow Jones industrial average was lower by 0.1 per cent to 24,901 points.
Volatile trading Tuesday saw the Dow Jones lose as much as 567 points in the morning, followed by a 569-point surge near the end of the day to finish higher by 2.3 per cent.
On Tuesday, it had briefly entered into correction territory, which is a 10 per cent drop from its peak.
The S&P 500 was down 0.3 per cent to 2,687, while the Nasdaq composite lost 0.4 per cent to 7,085.
Mark McCormick of TD Securities said the recent market action signals investors are not ready for "upside surprises" in inflation, given years of "downside misses."
"The primary takeaway is that markets are not prepared for an abrupt tightening of financial conditions," he said in a note.
"Now, equity valuations (particularly in the US) might look much less attractive against higher real rates."
The downward market spiral began on Friday after U.S. jobs data showed wages growing faster than expected, which raised the prospect of higher inflation that could prompt the Federal Reserve to raise interest rates by more than expected.
Around the world
Asian markets closed mixed, taking cues from the volatile trading day in North America on Tuesday.
The region's biggest market — Japan's Nikkei 225 index — finished higher by 0.2 per cent to 21,645, while Hong Kong's Hang Seng index was down 0.9 per cent to 30,323 points.
Mainland Chinese shares saw bigger losses with the Shanghai composite down 1.8 per cent to 3,310.
In Europe, the benchmark Stoxx 600 index was up one per cent.
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