Stocks rebound after S&P 500 correction
NEW YORK/ LONDON — US equities followed European stocks higher on Friday to end a bumpy week on a positive note, although safe-haven gold hit a record high with investors still showing some signs of anxiety about the economic impact of tariffs.
German government bond yields and the euro rose on Friday, with German Chancellor-in-waiting Friedrich Merz saying he had secured crucial backing from the Greens for a massive increase in state borrowing.
Germany’s news helped boost US Treasury yields, according to Garrett Melson, portfolio strategist at Natixis Investment Managers, who also attributed equity gains on Friday to the S&P 500 confirming it was in a correction on Thursday.
“It’s been a sharp decline from the highs in mid-February,” said Melson.
“You’re seeing some signs of it at least getting an intermediate low and a little bit of a relief rally,” he said. “There’s not really anything meaningful in the way of news to really drive a rally other than just the technicals.”
On Wall Street, the Dow Jones Industrial Average closed up 674.62 points, or 1.65 percent, at 41,488.19 while the S&P 500 rose 117.42 points, or 2.13 percent, to 5,638.94 for its biggest one-day percentage gain since Nov. 6, the day after the U.S. election.
The benchmark S&P index had finished Thursday more than 10 percent below its February record close after US President Donald Trump threatened to impose a 200 percent tariff on European wine and spirit imports, the latest trade war escalation after Europe retaliated against US tariffs on steel and aluminum.
Last week the Nasdaq confirmed it was in a correction, driven lower by tariff and growth uncertainties as well as high valuations for megacap tech stocks. The Nasdaq Composite ended up 451.07 points, or 2.61 percent, at 17,754.09 on Friday, for its biggest daily gain since Nov. 6.
MSCI’s broadest gauge of global stocks rose 14.73 points, or 1.79 percent, to 836.32 on Friday, but still showed its biggest weekly fall since December.
Earlier, the pan-European STOXX 600 index closed up 1.14 percent.
$3,000 an ounce
Spot gold breached $3,000 an ounce for the first time in early London trading, before losing ground to last trade down 0.17 percent to $2,982.72 an ounce. The precious metal is still up close to 14 percent year-to-date, as trade wars and growth worries boost its safe-haven appeal.
In fixed income, the yield on the benchmark German 10-year Bunds was last at 2.876 percent after earlier rising as high as 2.936 percent.
US Treasury yields rose as the stock market recovery reduced safe-haven demand for US government debt.
The yield on benchmark US 10-year notes rose 4.2 basis points to 4.318 percent, from 4.276 percent late on Thursday, while the 30-year bond yield rose 2.9 basis points to 4.6248 percent.
The two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 7 basis points to 4.023 percent, from 3.953 percent late on Thursday.
“What you’ve had over the past week or two is a repricing of what’s called the Trump put lower for equities, while at the same time, understanding that tariffs are probably here to stay in some form and aren’t just a negotiating tactic,” said Zachary Griffiths, senior strategist at CreditSights.
In currencies, the euro gained broadly on optimism about Germany. Against the dollar, the euro was up 0.28 percent at $1.0882 while against the pound it gained 0.44 percent and rose 0.63 percent against the Swiss franc.
