Markets rebound as tariff pause fuels rally, but volatility risks linger Key Highlights 156 Major indices soared: The Dow surged 600 points (1.8%), the S&P 500 rose 1.8%, and the Nasdaq jumped 2% in a single session (April 11, 2025). For the week, gains were even starker: the Dow climbed 6%, the S&P 500 8.2%, and the Nasdaq 11.6%—its best week since 2020. Catalyst: The rally followed President Trump’s decision to pause most "Liberation Day" tariffs for 90 days, easing fears of a prolonged trade war 15. White House stance: Press Secretary Karoline Leavitt declared "great optimism in this economy," framing tariffs as a "proven formula" to force trade negotiations 1. Market Context From Crash to Rally: The gains reversed a historic sell-off triggered on April 2 when Trump announced sweeping tariffs (up to 245% on China). The S&P 500 had plummeted 10% in days, erasing $6.6 trillion globally 5. Mixed Signals: Despite the rally, underlying risks persisted: Consumer sentiment hit a 17-year low (University of Michigan index at 50.8), with inflation expectations spiking to 6.7% 19. Bond yields surged (10-year Treasury at 4.6%), signaling investor anxiety about inflation and growth 1. Retaliatory tariffs: China imposed 125% tariffs on U.S. imports, escalating tensions 1. Sector Performance: Tech led gains: Semiconductor stocks like Broadcom (up 26% in May) drove the Nasdaq’s rebound 4. Small businesses pushed back: Some added "Trump Liberation Tariff" surcharges to products, blaming policy-driven price hikes 1. Expert Reactions Fed’s caution: Boston Fed President Susan Collins noted readiness to stabilize markets but ruled out emergency rate cuts due to inflation risks (March CPI at 2.4%) 1. Analyst warnings: Charles Schwab warned the rally might be a "pandemic-like dip," not a sustained recovery, given ongoing tariff uncertainty 7. Global Ripple Effects Oil prices crashed to 2021 levels ($60/barrel) on recession fears 5. Asian markets: Japan’s Nikkei swung wildly, while Thailand banned short-selling 5. Looking Ahead The White House’s optimism contrasts with stark warnings. As one strategist noted, "The market priced in a panic reversal, but double-digit tariffs are still a moving target" 7. With the S&P 500 now flat for 2025 after May’s 6% surge, investors brace for more volatility 26. → For ongoing updates, follow live coverage of trade negotiations and Fed policy shifts.
No comments: