Stock Market Roars Ninth Day in a Row, Rebounding from April's Slump Amid Trade War Hopes
Stock Market Prolongs Uptrend for Ninth Consecutive Day, Recovering Post-Tariff Spike
Stock markets triumphantly extended their run to a ninth consecutive day of gains on Friday, marking the longest bullish streak since 2004, as the S&P 500 retook its lost ground since April, following a better-than-expected U.S. job market report and optimism about a possible scaling-down of the U.S.-China trade conflict.
The S&P 500 surged 1.5%, the Dow Jones Industrial Average added 1.4%, and the Nasdaq composite rose 1.5%. Over 90% of stocks in the S&P 500 escalated, with tech giants Microsoft and Nvidia leading the charge. However, Apple faltered by 3.7% as the iPhone maker anticipated tariffs to cost them a whopping $900 million.
Banks and financial companies also posted robust gains, with JPMorgan Chase rising 2.3% and Visa closing 1.5% higher. The employment data for April indicated the addition of 177,000 jobs, a slowdown from March but still significantly exceeding economists' expectations. This job growth, however, doesn't comprehensively account for the effects of the still-unfolding trade tensions.
Some critics question whether the Trump administration will alter their initial tariff strategy when the three-month delay on more severe tariffs expires in July. With the S&P 500 having dipped 9.1% during the first week of April as a result of Trump's trade war escalation, investors are watching closely for changes in the administration's approach.
Apart from the trade saga, companies have been publishing resilient earnings reports, fueling hopes of a de-escalation of trade tensions with China and the promise of a few interest rate cuts from the Federal Reserve. However, the benchmark index is still down 3.3% year-to-date, and 7.4% beneath its record reached in February.
Additional Insights:
- Economic Impact: Tariffs are projected to result in a 1.1 percentage point reduction in 2025 GDP growth, significantly depressing equity valuations.
- Corporate costs: Higher tariffs increase input costs for companies, pressuring profit margins and posing challenges for consumer-facing sectors.
- Long-term risks: The long-run GDP decline and wage reduction due to tariffs may lead to structural reductions in corporate earnings and economic growth.
- The bullish streak in the stock market, lasting nine consecutive days, is being closely evaluated by investors, especially those in finance and business, as it rebounded from April's slump amid hopes of scaling-down in the U.S.-China trade conflict.
- The ongoing trade war has sparked discussions in general-news and politics, with critics questioning whether the Trump administration will alter their initial tariff strategy when the three-month delay on more severe tariffs expires in July.
- The S&P 500, retook its lost ground since April, and tech giants like Microsoft were among the stocks leading the charge, while Apple faltered due to anticipated tariffs that could cost them $900 million.
- The job market report, suggesting the addition of 177,000 jobs in April, is a positive sign, although it doesn't fully account for the effects of the ongoing trade tensions.
- The rebound in the stock market, despite the lingering trade conflict, is supported by resilient earnings reports from various companies, fueling hopes of a de-escalation with China and the promise of a few interest rate cuts from the Federal Reserve.
- The impact of tariffs on the economy is significant, with a projected 1.1 percentage point reduction in 2025 GDP growth and depressing equity valuations.
- Higher tariffs increase the input costs for companies, potentially pressuring profit margins and posing challenges for consumer-facing sectors.
- In the long run, the GDP decline and wage reduction due to tariffs may lead to structural reductions in corporate earnings and economic growth.
