After one of the most volatile weeks in recent memory, major U.S. stock indexes closed higher, reflecting the intense market fluctuations sparked by President Trump’s escalating trade war.
The Dow Jones Industrial Average jumped 1.6%, gaining 619 points on Friday, despite growing concerns over the U.S. economy's health. The trade war with China continued to intensify, with both countries imposing new tariffs, and key U.S. assets, including the dollar and Treasurys, faced heavy selling pressure. Notably, the 10-year Treasury yield recorded its steepest weekly rise in over two decades.
Stocks initially dipped on Friday after a widely followed consumer sentiment survey revealed a sharp downturn, with sentiment dropping to one of its lowest levels on record. This drop came amid growing recession fears, with respondents predicting a 6.7% increase in prices over the next year—a level of inflation expectations not seen since the early 1980s.
However, by the afternoon, the market had reversed course. The White House revealed that it had 15 trade-deal offers on the table, signaling efforts to ease the trade conflict. Additionally, Boston Federal Reserve President Susan Collins suggested that recent market volatility had not impeded investors' ability to engage in trading.
Despite the positive market turn, key officials issued warnings about the future economic landscape. New York Fed President John Williams cautioned that growth could slow further, with inflation potentially rising to 4%. Meanwhile, JPMorgan’s Jamie Dimon described the economic outlook as facing “considerable turbulence,” even as his bank reported strong quarterly results driven by robust trading volumes.
On the global stage, China escalated tensions by raising tariffs on U.S. goods to as high as 125%, while dismissing President Trump’s tariff hikes as ineffective on the world stage. In response, Canada’s Prime Minister Mark Carney announced plans to counter U.S. tariffs on steel, aluminum, and automobiles, vowing to cause "maximum pain."
Meanwhile, French President Emmanuel Macron warned that the temporary suspension of U.S. tariffs “remains fragile” and emphasized the EU’s need to prepare further countermeasures. EU Trade Commissioner Maroš Šefčovič is set to meet U.S. officials in Washington next week to discuss the ongoing trade tensions.
Despite the geopolitical and economic headwinds, stocks finished the week strong. The Nasdaq Composite soared 7.3% for the week, while the S&P 500 gained 5.7%, and the Dow Jones rose 5%. On Friday alone, the Nasdaq led the charge with a 2.1% gain.
Meanwhile, gold surged to new all-time highs as investors sought safe-haven assets amidst the global uncertainties surrounding the trade war and rising inflation concerns.
The U.S. dollar faced continued pressure, falling for the fifth consecutive day, marking its worst week since 2022. In contrast, the euro surged. The 10-year Treasury yield climbed to 4.492%, recording a significant 0.5 percentage point weekly increase, the largest since 2001, signaling growing concerns about future inflation and economic instability.
International markets were mixed. Japan’s Nikkei 225 index fell 3% for the week, while the Stoxx Europe 600 ended the week slightly lower, reflecting broader concerns about the global economic outlook.
As global trade tensions continue to escalate and recession fears loom, investors are closely watching how these dynamics unfold in the coming weeks. The uncertainty surrounding trade policies, inflation expectations, and market volatility continues to shape both the U.S. and global financial landscape.
Credit: https://www.wsj.com/livecoverage/stock-market-trump-tariffs-trade-war-04-11-25
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