Wall Street ended the week with a sharply positive close, capping off a rollercoaster of a week after White House hinted that it would be open to negotiating a deal with China.
After days of extreme volatility, a wave of optimism has sent major indexes surging.
S&P 500 rose 1.8% while Dow Jones Industrial Average gained 658 points or 1.7%.
Investors rushed to riskier assets as the Nasdaq Composite, a tech-heavy index, surged by 2%.
The markets gained momentum after the White House said that President Donald Trump is “optimistic about China’s desire to reach a trade agreement with the United States”.
Investors were able to shake off the concerns which had shaken markets earlier this week.
The US stock market has been experiencing one of its most volatile periods in recent memory.
Major averages fell sharply on Thursday as traders reacted to fears of escalating tensions in the trade war.
The Dow Jones fell by 1,014 or 2.5% points and the Nasdaq dropped 4.31%.
This sell-off occurred just one day after an historic rally that took place on Wednesday when Trump announced the 90-day suspension of certain tariffs.
This announcement caused a strong rebound. The S&P 500 rose 9.52% in one day, the third largest gain recorded since World War II. Meanwhile, the Dow shot up by over 2,900 points.
The theme of volatility was a dominant one throughout the entire week.
CBOE Volatility Index, Wall Street’s fear gauge (VIX), spiked higher than 50 before dropping to hover around 44 on Friday.
Investors are often deeply uncertain about the economic and political risks.
The dominant driver of the market is still trade policy.
Investors remain cautious on the future of US-China relations, despite Trump’s softening tone.
Market participants are concerned that escalation or policy changes could lead to another round of selling.
In addition to trade news and economic data, corporate earnings reports as well as updates on the economy also contributed to boosting sentiment.
The trade data dominated other market indicators and reinforced the fact that markets are highly sensitive to headlines about geopolitics.
Analysts warn, however, that volatility could persist, as investors continue weighing mixed signals in the trading front.
Major indexes recovered some losses from earlier in the week, but they all remained lower for the entire month.
Investors and traders alike prepare for more dramatic headlines in the weeks to come as Washington and Beijing continue their negotiations.
The post US Stocks Rebound as White House Signals Trade Optimism with China could be updated as new developments unfold.
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