Stocks on Friday erased losses suffered in the days after President Trump’s chaotic rollout of tariffs in early April, bolstered in part by a healthy report on the labor market.
The S&P 500 rose 1.5 percent on Friday, climbing back above where it stood before chaos descended on financial markets after April 2 — Mr. Trump’s so-called Liberation Day, which featured his most sweeping tariffs to date.
Friday’s boost to stock prices followed a stronger-than-expected report on hiring in April. But the S&P 500 has been edging higher for days — logging nine consecutive daily increases — as Mr. Trump and members of his administration raised hopes that trade tensions would ease, including by indicating they were willing to engage in talks with China.
Early Friday, China’s commerce ministry said in a statement that it, too, was considering holding talks with the Trump administration, but only if Washington canceled its tariffs on Chinese goods first.
The two countries remain far from any deal that would resolve their trade war, but even the prospect of talks has been enough to ease the worst of the anxiety that gripped investors a month ago.
“If the labor market holds up and the Trump administration walks back the most egregious tariffs, the economy could skirt a deep recession,” said Jeffrey Roach, chief economist at LPL Financial.
Still, despite the recent optimism and recovery, the S&P 500 is more than 7 percent below its recent high in mid-February. It has fallen about 5 percent since Mr. Trump’s inauguration in January.
Questions remain about whether Mr. Trump’s tariffs might cause a sharp slowdown in economic growth, which could result if companies start pulling back on hiring, spending and investments amid the uncertainty. As they have reported quarterly earnings in recent days, many companies have said they are struggling to forecast how the rest of the year will shape up because of the lack of clarity on trade policy. Several consumer companies have said they’ll have to raise prices — which could further dent the economy if it discourages spending.
Though Mr. Trump backed off the most extreme tariffs on dozens of countries, many imports into the United States now face new taxes of at least 10 percent, while products from China are being taxed a minimum of 145 percent. On Friday, a provision that had allowed for low-value shipments from mainland China and Hong Kong to evade tariffs altogether closed. And on Saturday, new tariffs of 25 percent on imported auto parts are expected to take effect. That’s in addition to a tax of 25 percent on imported cars that already took effect in April.
Volatility in recent weeks has underscored the degree to which sentiment on Wall Street is still driven by concern about the economic fallout from the Trump administration’s policies. Mr. Trump’s 90-day pause of many of the tariffs that he announced on April 2 will end in July.
“The damage to economic momentum has already been done,” said Mike Sanders, head of fixed income at Madison Investments. “Deals may come, but the real question is how long the data will take to reflect the harm.”
