U.S. stocks closed at fresh all-time highs on Friday, marking a significant milestone in what has been a dramatic recovery for the markets following a sharp decline earlier in the year. The rebound comes just months after fears surrounding the Trump administration’s trade policies sent shockwaves through Wall Street and triggered a nearly 20% correction.
The S&P 500 rose by 0.5%, closing at 6,173.07, surpassing its previous record set in February. From February 19 through April 8, the benchmark index had fallen nearly 20% as investors feared that rising tariffs and escalating trade tensions could severely damage economic growth. Now, after months of turbulence, the index has fully recovered, and in record time.
“This kind of turnaround is rare,” said Sam Stovall, chief investment strategist at CFRA. “Historically, it takes much longer for the market to climb back from a near-bear market. Investors will breathe a sigh of relief knowing that confidence is returning.”
The Nasdaq Composite climbed 0.5% to finish at 20,273.46, also notching a new high, while the Dow Jones Industrial Average jumped 1%, or 432.43 points, to 43,819.27.
While investor sentiment has improved, trade issues remain a central theme. President Donald Trump’s abrupt decision to suspend trade talks with Canada on Friday briefly shook the markets, with the S&P 500 dipping into negative territory before recovering later in the session. Despite the setback, the broader market held firm, aided by widespread gains across nearly every sector.
US Stocks Hit Record Highs Just Months After Tariff-Induced Plunge
One standout was Nike, whose shares soared 15.2%, the day’s biggest gainer, even after the company warned that tariffs would take a toll on future earnings. The market’s upbeat mood was also supported by signs that global oil supply concerns were easing. Despite past disruptions linked to conflict between Israel and Iran, a ceasefire has held, helping crude oil prices stabilize.
On Friday, U.S. crude oil rose 0.4% to $65.52 per barrel, returning to pre-conflict levels. Analysts say energy prices are no longer a major source of market anxiety.
Further fueling optimism were signs of progress in U.S.–China trade negotiations. A newly signed agreement will reportedly ease the process for U.S. companies to access vital rare earth minerals from China — essential inputs for technology and manufacturing.
U.S. Treasury Secretary Scott Bessent announced that the deal would benefit sectors reliant on microchip production, magnets, and advanced manufacturing materials. However, China’s Commerce Ministry offered a more cautious tone, stating that while the two sides had “confirmed the framework,” it would still review and approve “eligible export applications,” stopping short of guaranteeing full access.
Meanwhile, inflation remains a key concern for both businesses and consumers. A report released Friday showed that prices rose slightly in May, aligning with economists’ expectations. However, the persistent uncertainty caused by tariffs — including baseline 10% import duties on all goods and additional levies on Chinese imports, steel, and automobiles — has complicated financial planning for many companies.
“Businesses are struggling to forecast earnings in this volatile tariff environment,” said Greg Wilensky, head of U.S. fixed income at Janus Henderson. “We’re likely to see the inflationary impact of tariffs become more visible in the coming months.”
The Federal Reserve is watching inflation closely. Its preferred measure, the Personal Consumption Expenditures (PCE) index, rose to 2.3% in May, up from 2.2% in April — slightly above the Fed’s 2% target. This inflation stickiness has prevented the central bank from cutting interest rates so far in 2025.
The Fed had previously slashed interest rates three times in 2024 to combat a slowdown caused by earlier rate hikes and inflation spikes, which saw PCE peak at 7.2% in 2022 and the Consumer Price Index (CPI) hit 9.1%. Economists now expect at least two rate cuts later this year — if inflation remains contained and the economy avoids another trade-related shock.
Bond yields were largely stable. The yield on the 10-year U.S. Treasury rose slightly to 4.27% from 4.24% on Thursday, while the two-year yield, more sensitive to interest rate expectations, edged up to 3.74%.
Markets overseas saw mixed results. Stocks in Europe were mostly higher, reflecting Wall Street’s positive momentum. In Asia, trading was more muted, with some indexes ending lower as investors weighed global trade and inflation trends.
While Friday’s rally capped an extraordinary turnaround for U.S. markets, uncertainty still looms. The expiration of the pause on a new round of retaliatory tariffs in July could again test investor nerves. Policymakers have yet to fully resolve key trade issues, and the broader economic effects of sustained import taxes may still be felt in the quarters ahead.
Still, the resilience of the market has surprised many observers, with optimism cautiously returning to Wall Street — for now.
Source- Newsday
