U.S. stocks rebounded in a volatile session on Friday, while the dollar cut losses and bond yields rose to session highs, as reports emerged U.S. President Donald Trump fired his controversial chief strategist Steve Bannon.

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President Donald Trump fired chief strategist Steve Bannon on Friday, the White House announced, ending the turbulent tenure of a rabble-rousing conservative media entrepreneur and political activist who was a darling of Trump's base.

"There’s a lot of hopeful people thinking that, you know what, he has been a divisive figure in the White House," said Peter Costa, President of Empire Executions. "Getting rid of him might be a good deal for the president.”

Gold turned negative after the reports, which seemed to turn investor focus away from uncertainty over Trump policy and nerves over terrorist attacks in Spain.

Trump has alienated Republican colleagues, corporate leaders and overseas allies this week with several controversial comments after violence related to a white nationalist protest in Virginia last weekend.

His criticism of removals of U.S. Confederate monuments that celebrate defenders of slavery sent shivers through markets as investors bet that the stance would hurt Trump's ability to build enough consensus to deliver growth boosts such as tax reform and stimulus spending.

"It appears they've gotten so bogged down in the politics of Confederate monuments, everybody thinks they're incapable of delivering meaningful change," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

Months of relatively low volatility did not help.

"We've been overly complacent for an extended period of time, and the normal anxieties in the market are beginning to reawaken," said McCain.

Ticker Security Last Change Change % SPY SPDR S&P 500 ETF 330.65 -5.19 -1.55% QQQ INVESCO QQQ NASDAQ 100 266.87 -3.45 -1.28% DIA SPDR DOW JONES INDUSTRIAL AVG ETF T SER'1' UNITS OF BEN INT NPV 276.52 -3.05 -1.09%

The Dow Jones Industrial Average rose 20.73 points, or 0.1 percent, to 21,771.46, the S&P 500 gained 7.13 points, or 0.29 percent, to 2,437.14 and the Nasdaq Composite added 26.79 points, or 0.43 percent, to 6,248.70.

U.S. consumer sentiment rebounded in early August from an eight-month low in July, reflecting confidence in the economic outlook and personal finances.

The dollar index .DXY fell 0.13 percent, with the euro up 0.25 percent to $1.1752.

The Japanese yen strengthened 0.10 percent versus the greenback at 109.48 per dollar. The dollar had hit its lowest point in a week against the yen earlier in the session.

Benchmark 10-year notes US10YT=RR last fell 3/32 in price to yield 2.2062 percent, from 2.197 percent late on Thursday.

Spot gold XAU= dropped 0.1 percent to $1,285.97 an ounce to the highest since last November XAU= and on track for its second week of gains.

Oil prices rose as the stock market strengthened and the U.S. dollar weakened, though investors remained worried about the global oil glut.

U.S. crude CLcv1 rose 2.8 percent to $48.41 per barrel and Brent LCOcv1 was last at $52.59, up 3.06 percent on the day.

The pan-European FTSEurofirst 300 index lost 0.73 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.08 percent. Investors had reacted a terrorist attack in Barcelona by selling shares in airlines. Madrid shares fell 0.8 percent.