U.S. stocks rose Friday, bouncing at the end of the week after the bellwether S&P 500 index slipping into correction territory on concerns over an escalating trade war and potential recession.
At 09:45 ET (13:45 GMT), the Dow Jones Industrial Average traded 270 points, or 0.7%, higher, the S&P 500 index rose 68 points, or 1.2%, and the NASDAQ Composite gained 295 points, or 1.7%.
The S&P 500 closed 1.4% lower on Thursday, entering correction territory, which is typically defined as a 10% fall from a recent peak.
The Dow is on track for its second straight losing week and worst weekly decline since June 2022. This would be the fourth negative week in a row for the S&P 500 and Nasdaq.
Government shutdown likely averted
Sentiment has been boosted after Senate Democratic Leader Chuck Schumer announced late Thursday that he would support the Republican-crafted stopgap funding bill to prevent a government shutdown, despite reservations within his party.
Schumer’s backing of the bill is seen as a strategic move to avoid a shutdown, which would commence at midnight on Friday when current funding expires for programs excluding Social Security, Medicare, and Medic aid.
The proposed bill was passed by the House of Representatives earlier this week.
Michigan sentiment data due
However, despite improved technicals that could support short-term rebounds, "rallies will likely be sold until Trump or the Fed pivot," Barclays analysts wrote in a note Friday.
President Donald Trump further escalated trade tensions on Thursday by threatening to impose a 200% tariff on European alcoholic beverages, including wines and champagnes, in retaliation for the European Union’s decision to levy a 50% tariff on American whiskey.
The EU’s move, effective April 1, responded to the U.S.’s recent 25% tariffs on imported steel and aluminum.
Investors fear the escalating trade war could reignite inflation and potentially lead the U.S. economy into a recession.
Additionally, the Federal Reserve has turned more hawkish, with these inflation fears stopping the recent run of interest rate cuts
Amid fears of an economic slowdown, markets will be eyeing the latest gauge of consumer sentiment from the University of Michigan, as traders hope to glean more insight into the recently downbeat state of the American shopper.
The preliminary measure for March is tipped to edge lower. In February, it declined to a seven-month low due to rising worries over the negative effects of Trump’s tariffs on their purchasing power. Notably, the survey found that the dip occurred across age and wealth groups as well as political affiliations.
Tesla attempts to defend Chinese market share
In the corporate sector, Tesla (NASDAQ:TSLA) stock rose 2.5% after Reuters reported the EV manufacturer is set to introduce a more affordable version of its Model Y in China, aiming to strengthen its position in its second-largest market.
Tesla stock has fallen over 30% this month alone amid outrage over Elon Musk’s role with DOGE, slowing sales, and protests at Tesla dealerships. Tthe electric vehicle maker has also warned that reciprocal tariffs as part of the Trump-instigated trade war could harm it.
Crude gains on Ukraine ceasefire doubts
Oil prices bounced on Friday after Russian President Vladimir Putin suggested that a U.S. proposal for a ceasefire in the war in Ukraine needed some reworking.
At 09:45 ET, Brent futures rose 0.3% to $70.11 a barrel, while U.S. West Texas Intermediate futures rose 0.4% to $66.79 a barrel.
Putin said on Thursday that while Russia supported the plan in principle, more clarifications and conditions on a range of points had to be sorted out before the fighting could come to a halt
