U.S. stocks surged on Friday after another chaotic day on Wall Street, as the falling value of the U.S. dollar and fluctuations in financial markets highlighted ongoing concerns over President Donald Trump’s trade war with China.
The S&P 500 gained 1.8%, despite frequent shifts between gains and losses, capping off a week filled with dramatic market movements. The Dow Jones Industrial Average initially dropped nearly 340 points but later surged by 810 points, finishing up 619 points, or 1.6%. The Nasdaq composite rose 2.1%.
Stocks began climbing as pressure eased from the U.S. bond market, which had shown worrying signs of instability. The yield on the 10-year Treasury bond briefly spiked to 4.58%, up from 4.01% a week earlier. This shift raised concerns that higher rates could slow the economy by raising costs for mortgages and loans. However, yields eased back to 4.48% in the afternoon, offering some relief.
Susan Collins, president of the Federal Reserve Bank of Boston, stated that the Fed would be prepared to address any market disruptions, noting that the central bank had tools to ensure market stability if needed.
The sharp rise in U.S. Treasury yields could be due to foreign investors selling U.S. bonds due to the trade war, or hedge funds liquidating assets to cover other losses. Another concern is that the ongoing tariff changes could weaken confidence in the U.S. dollar as a stable investment, leading to a drop in its value against currencies like the euro, Japanese yen, and Canadian dollar. Gold, however, saw an increase in value as investors sought safer options.
This volatility followed China’s announcement on Friday that it would increase tariffs on U.S. products to 125%, retaliating against Trump’s import taxes. China’s Finance Ministry criticized the U.S. tariffs, calling them a “numbers game” with no practical economic impact, and vowed to continue fighting back.
The escalating trade tensions between the U.S. and China raised fears of a potential global recession, despite Trump’s recent announcement of a 90-day pause on tariffs for most countries, excluding China.
Wall Street signs are displayed outside the NYSEThe uncertainty surrounding the trade war is also affecting U.S. consumer confidence, which could lead to reduced spending and hurt the economy. A University of Michigan survey showed that U.S. consumer sentiment has declined more sharply than expected, with all demographic groups showing a drop in confidence.
Experts like Darrell Cronk from Wells Fargo Investment Institute suggest that the trade situation is still in its early stages, and while the pause in tariffs temporarily eased market fears, it prolonged the uncertainty.
The week saw wild fluctuations in the U.S. stock market, starting with dramatic swings triggered by rumors about a 90-day tariff pause. The market then soared when Trump confirmed the pause, only to see more volatility by week’s end.
By Friday, the S&P 500 rose 95.31 points to 5,363.36, the Dow gained 619.05 points to 40,212.71, and the Nasdaq added 337.14 points to 16,724.46.
This jump came after several U.S. banks, including JPMorgan Chase, Morgan Stanley, and Wells Fargo, reported stronger-than-expected profits. The results were seen as positive, despite concerns that inflation could rise in the coming months due to the effects of tariffs on the economy.
The latest inflation report showed better-than-expected results, giving the Federal Reserve some flexibility in cutting interest rates if necessary. However, worries remain that tariffs could drive up prices in the future, which could limit the Fed’s ability to respond.
The University of Michigan survey also indicated that U.S. consumers are bracing for inflation of 6.7% over the next year, the highest expected rate since 1981. This could create a cycle of rising inflation, as consumers adjust their expectations upward.
Global stock markets showed mixed results, with Germany’s DAX index falling by 0.9%, while the FTSE 100 in London rose 0.6%. Japan’s Nikkei 225 dropped 3%, and Hong Kong’s Hang Seng increased by 1.1%.
