U.S. stocks wavered on Friday, signaling an end to a three-day rally that was driven by investor hopes of a de-escalation in the trade war.
The Dow Jones Industrial Average rose 20 points, or 0.1%, to close at 40,114, while the S&P 500 added 40 points, or 0.7%, to close at 5,525. The Nasdaq Composite gained 1.3% thanks to boost from a handful of Big Tech stocks, including Nvidia.
Mr. Trump had adopted a softer stance on trade in recent days, allaying investors’ concerns and helping trigger a three-day relief rally following a volatile trading day on Monday. Paul Ashworth, chief North America economist at Capital Economics, said in a Friday research note that negative activity in the market played a “key role” in the president’s decision to reconsider his steep tariffs on imported Chinese goods, which currently total 145%.
Meanwhile, the markets are also reacting to mixed signals from the White House about potential trade deals.
Mr. Trump this week hinted at a possible trade deal with China, but the Chinese government has denied the two countries are in active negotiations. CNN did report that China was rolling back the 125% retaliatory tariffs on U.S. semiconductors, a sign it could be relaxing its stance.
“We’re in a headline driven market, and we’re prone to volatility spikes and outsized trading ranges in both directions,” said Bret Kenwell, a U.S. investment analyst at eToro. “And you know, it’s probably going to remain that type of market until we at least have more clarity on what’s going on.”
In a Time interview released Friday morning, Mr. Trump suggested his administration has struck 200 trade deals with countries, and that those would be announced in the next three to four weeks.
CEOs: “Elevated uncertainty”
On Thursday and Friday, several companies cautioned that uncertainty created by Mr. Trump’s trade war is making it difficult to give financial forecasts for the upcoming year.
Intel weighed on the market after the chip company said it’s seeing “elevated uncertainty across the industry” and gave a forecast for upcoming revenue and profit that fell short of analysts’ expectations. Its stock fell 6.8% even though its results for the beginning of the year topped expectations.
Eastman Chemical fell 5.9% after it gave a forecast for profit this spring that fell short of analysts’ expectations. CEO Mark Costa said that the “macroeconomic uncertainty that defined the last several years has only increased” and that future demand for its products “is unclear given the magnitude and scope of tariffs.”
Skechers U.S.A., the shoe and apparel company, pulled its financial forecasts for the year due to “macroeconomic uncertainty stemming from global trade policies” even though it just reported a record quarter of revenue at $2.41 billion. Its stock fell 4.3%.
Trade deals
Over the last few weeks, the president and members of his administration have been meeting with different countries to discuss bi-lateral trade deals. This comes after Mr. Trump paused the implementation of so-called “reciprocal tariffs” for 90 days — providing a sigh of relief to markets and consumers alike. This pause, UBS analysts said, demonstrates that the president is aware of how tariffs might be negatively impacting market activity.
“So, while we expect equity markets to remain choppy, the risk-reward for stocks is looking more appealing, especially now that we know that Trump is attuned to the risks from his tariff policies,” said David Lefkowitz, head of U.S. equities at UBS Global Wealth Management in a research note.
Lefkowitz said that the tariff-induced slowdown will hinder corporate profit growth, but projected the economy would rebound next year as businesses and consumers acclimate to tariffs and the Fed introduces rate cuts.
Tariffs on China could be slashed to as low as 50 to 65%, the Wall Street Journal this week reported. But even if tariffs do come down as a result of trade negotiations, that doesn’t mean the U.S. economy is out of the woods yet. The remaining levies could still stifle economic growth, analysts say.
“The April 2 rose garden start on tariffs might have been the high water mark, but you’re still talking about a significant burden that is being imposed on companies and the economy from tariffs,” said Adam Crisafulli, an analyst at Vital Knowledge. “And that’s not going away.”
While the U.S. stock market lost some steam on Friday, an ease in 10-year Treasury yields and a rebound in U.S. dollar index provided welcome signs of relief. The 10-year Treasury fell from a peak of 4.4% earlier this week to 4.3% on Friday, while the value of the U.S. dollar ticked up to throughout the week, strengthening against the euro and other rival currencies.
In stock markets abroad, indexes rose modestly across much of Europe following more mixed movements in Asia. Tokyo’s Nikkei 225 jumped 1.9%, while stocks in Shanghai slipped 0.1%.
contributed to this report.