Anxious investors look for calm

Shell-shocked stock investors will search next week for calm to return to markets after the worst three weeks for stocks in 2 1/2 years.

With the blow from the August 5 U.S. credit rating downgrade behind them, investors will focus on the outlook for the U.S. economy as well as signs that European policymakers may be able to contain the euro zone debt crisis.

Widespread investor panic put the market on a roller-coaster ride this week, with steep losses followed by nearly-as-steep gains in high-volume trading. It was the busiest week for volume since October 2008.

Though investors are still searching for a bottom in the selloff that has taken the benchmark Standard & Poor’s index down 12.4 percent since July 22, indexes rose both Thursday and Friday — the index’s first two-day rally since mid-July — and volatility eased.

The move could set stocks up for a calmer week, especially if economic data shows the United States is not headed for another recession, strategists said.

“Every bit of data that shows the economy not slipping into recession is going to be the basis for the market to begin to calm down in the weeks ahead,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.