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US stocks rebounded on Friday, halting a sharp sell-off spurred by concerns that Donald Trump’s tariffs would hurt the world’s biggest economy.
The S&P 500 closed 1.6 per cent higher, reversing losses earlier in the session and trimming its decline in February to 1.4 per cent. The tech-heavy Nasdaq Composite index closed 1.6 per cent higher but has fallen 4 per cent over the past month.
European markets had recouped most of their losses before Wall Street’s close, having opened lower as President Trump’s latest tariff threats on trading partners such as the EU and China kept investors on edge.
Trump stoked greater anxiety on Friday, accusing Ukraine’s President Volodymyr Zelenskyy of “gambling with world war three” in a fiery meeting in the White House.
Friday’s market gains come at the end of a volatile month for equities investors. US markets have sold off sharply in response to gloomy economic data and concerns US tariffs would dent economic growth.
“The last days have been painful to a number of investors . . . Trump’s tariff announcement has rattled the already fragile market,” said Mohit Kumar, an analyst at Jefferies.
Stocks surged late on Friday, however, with 441 of the S&P 500’s constituent stocks ending the session higher even after the Federal Reserve Bank of Atlanta projected the US economy would shrink 1.5 per cent in the first quarter of this year. It had forecast growth of 2.3 per cent over the same period as recently as two weeks ago.
Chipmaker Nvidia, the biggest winner from investor enthusiasm for artificial intelligence over the past two years, rose 4 per cent, having lost 8.4 per cent on Thursday despite beating analysts’ forecasts with its fourth-quarter earnings.
In Europe, the broad Stoxx Europe 600 and Germany’s exporter-heavy Dax both ended the day flat, regaining lost ground.
Earlier, Japan’s Nikkei 225 index lost 2.9 per cent, South Korea’s Kospi slid 3.4 per cent and Hong Kong’s Hang Seng index fell 3.3 per cent, as investors reacted to the previous day’s US sell-off. Mainland China’s CSI 300 benchmark lost 2 per cent.
Investors had been blindsided on Thursday by the latest trade salvo from Trump, who said he would impose an additional 10 per cent tariff on Chinese imports and press ahead with levies on Canada and Mexico from March 4.
Despite a barrage of threats since taking office in January, Trump has only imposed a 10 per cent tariff on Chinese imports, but there are signs the spectre of a trade war has dented consumer confidence in the US.
Confidence in February fell the most since August 2021, according to a Conference Board Consumer Confidence Index released this week.
Trump’s election victory in November powered US stocks higher on hopes the new administration would enact pro-business economic policies, but the S&P 500 had fallen back in recent days as focus turned to the threats from tariffs to the US economy.
“I think to a level this is a healthy correction. There is some profit-taking,” said Winnie Wu, an equity strategist at Bank of America. “The market always tries to price a five-year story in five days or five weeks.”
Source: Economy - ft.com
