U.S. Stocks Surge Amid Trade War Volatility

11 Apr at 4:14 pm

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U.S. Stocks Surge Amid Trade War Volatility \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Wall Street saw strong gains Friday despite market volatility fueled by U.S.-China trade tensions. Bond yields spiked then eased, and the U.S. dollar weakened across global currencies. Positive earnings and inflation data offered temporary relief in an otherwise turbulent week.

Quick Looks

Stocks rallied Friday, ending a chaotic week with solid gains.
The S&P 500 rose 1.5%, the Dow climbed 567 points, and Nasdaq jumped 1.7%.
The Dow swung nearly 1,150 points intraday before settling higher.
U.S.-China trade tensions intensified as China imposed 125% tariffs on U.S. goods.
Fears of a prolonged trade war continue to unsettle global investors.
Bond yields spiked but cooled later; the 10-year Treasury ended at 4.48%.
Falling U.S. dollar and rising gold prices signal lingering investor anxiety.
A University of Michigan survey showed a sharp drop in consumer sentiment.
JPMorgan Chase, Morgan Stanley posted strong Q1 earnings; Wells Fargo fell.
U.S. wholesale inflation rose less than expected, offering temporary relief.
Fed’s Collins said central bank is ready to respond to market stress.
Global markets showed mixed reactions, with Asia and Europe diverging in performance.

Deep Look

Wall Street closed a rollercoaster week with sharp gains on Friday, as major U.S. indexes rallied despite lingering investor anxiety over escalating trade tensions between the United States and China. The late-week surge came as market participants juggled strong corporate earnings, shifting bond yields, and fresh signs that consumers are growing increasingly uneasy about the future.

The S&P 500 rose 1.5% by late afternoon, while the Dow Jones Industrial Average climbed 567 points — a 1.4% gain — after swinging between a loss of nearly 340 points and a peak gain of over 800. The Nasdaq composite also climbed, finishing the day 1.7% higher.

Market Gains Mask Deep Uncertainty

Although the late rally gave some hope to investors, it did little to erase the underlying volatility that has defined the week. The bond market, often a more stable section of Wall Street, has been signaling distress. On Friday morning, the 10-year Treasury yield briefly touched 4.58%, a stunning jump from 4.01% just one week earlier. While it retreated to 4.48% by afternoon, the jump was still large enough to rattle financial institutions and raise the cost of borrowing across the economy.

Bond market volatility has prompted concerns that mortgage rates and corporate lending costs could surge, potentially slowing down economic growth. Analysts say part of the yield surge may stem from global investors dumping U.S. government bonds in reaction to trade policy shifts, while others believe hedge funds are liquidating positions to cover losses elsewhere.

Federal Reserve Bank of Boston President Susan Collins acknowledged the stress in an interview with the Financial Times, saying the Fed “has tools” and would “absolutely be prepared” to intervene if financial markets became disorderly.

Dollar Weakens, Gold Gains Ground

Further signs of market tension emerged in the currency markets. The U.S. dollar fell against major currencies including the euro, Japanese yen, and Canadian dollar, raising fears about waning global confidence in America’s financial stability. Meanwhile, gold prices climbed, reinforcing its traditional role as a safe-haven asset during times of uncertainty.

The selloff in the dollar coincided with renewed concerns about America’s role as a reliable store of value amid aggressive trade moves by the Trump administration.

China Fires Back With Steep Tariffs

Fueling much of the anxiety is the deepening trade conflict with China. On Friday, Beijing raised tariffs on U.S. imports to 125%, escalating its economic retaliation after President Trump imposed new duties on Chinese goods earlier this week.

In a fiery statement, China’s Finance Ministry dismissed the latest U.S. tariffs as “a numbers game” with no real economic logic, warning that if Washington continues to “substantially infringe” on China’s interests, the country will “resolutely counter and fight to the end.”

Despite President Trump’s recent move to temporarily pause some tariffs for countries other than China, fears of a prolonged U.S.-China trade standoff continue to cloud the global economic outlook. Economists warn that sustained tensions between the two largest economies could spark a global recession.

Consumer Confidence Wanes Amid Inflation Fears

A fresh report from the University of Michigan showed that consumer sentiment has plunged, with Americans across all demographics expressing pessimism. Survey director Joanne Hsu said the decline was “pervasive and unanimous” across age, income, education, region, and political alignment.

Adding to concerns, the survey found that U.S. consumers expect inflation to hit 6.7% over the next year, the highest projection since 1981. Such expectations can feed into actual inflation by influencing consumer behavior and wage demands — a dynamic economists refer to as a feedback loop.

Corporate Earnings Offer Some Relief

Despite the overarching gloom, corporate America offered glimmers of positivity. JPMorgan Chase, Morgan Stanley, and Wells Fargo released first-quarter earnings reports that mostly beat expectations.

JPMorgan Chase jumped 4.5% after delivering a solid earnings beat.
Morgan Stanley rose 2% on similar strength.
Wells Fargo dipped 1%, disappointing investors despite profit growth.

These early earnings reports are closely watched as bellwethers for the broader market. Positive results can temporarily soothe investor nerves and encourage short-term buying, as seen in Friday’s rally.

Inflation Report Brings Temporary Calm

Another potentially encouraging signal came from a wholesale inflation report, which showed March prices rising less than expected. That opens the door for the Federal Reserve to cut interest rates if necessary, though economists caution that the data may be outdated.

If Trump’s tariffs continue to impact supply chains and raise input costs, inflation may rise again in coming months — possibly limiting the Fed’s ability to act. A delayed inflation spike could further complicate monetary policy heading into the second half of the year.

Global Markets Remain Mixed

International markets offered no clear consensus. In Europe, Germany’s DAX index dropped 0.9%, while London’s FTSE 100 rose 0.6% after the UK reported unexpected economic growth in February. In Asia, Japan’s Nikkei 225 fell 3%, signaling concern in one of the world’s largest export economies. Hong Kong’s Hang Seng climbed 1.1%, showing resilience despite the regional uncertainty.

Outlook: Caution Amid Conflicting Signals

While Friday’s rally capped a wild week with optimism, experts warn that volatility is far from over. With inflation expectations rising, consumer confidence falling, and geopolitical tensions growing, markets may remain turbulent.

According to Darrell Cronk, president of the Wells Fargo Investment Institute, “We remain in the early innings of this global trade regime change.” He added that while a 90-day tariff pause helped ease some pressure, the broader uncertainty “prolongs volatility.”

Investors are now watching closely for Fed commentary, further earnings reports, and any developments in the U.S.-China trade conflict to gauge the path forward.