U.S. stocks rose sharply on Friday, marking another day of chaos on Wall Street as a falling dollar and other swings in financial markets pointed to continued high levels of fear over the potential escalation of President Donald Trump's trade war with China.
The S&P 500 Index rose 1.8% after many swings, capping a turbulent and historic week filled with significant swings. The Dow Jones Industrial Average went from an early drop of nearly 340 points to a gain of 810 before settling for a gain of 619 points, or 1.6%, while the Nasdaq composite rose 2.1%.
Stocks have risen as pressure eases on the U.S. bond market, a quieter part of Wall Street that has sent out enough warning signs this week to grab the attention of investors and Trump himself.
The yield on the 10-year Treasury note hit 4.58% this morning, up from 4.01% last week. That's a big change for a market that typically measures swings in hundredths of a percentage point. Such jumps could push up rates on mortgages and other loans to U.S. households and businesses, which could slow economic growth and signal strain in the financial system.
However, by the end of the day, Treasury yields had fallen, with the 10-year yield at 4.48%. While higher than the day before, that was not as shocking.
Susan Collins, president of the Federal Reserve Bank of Boston, told the Financial Times that the Fed would be “absolutely prepared” if markets got out of hand and “has the tools to deal with market functioning or liquidity issues if they arise.”
The rise in U.S. Treasury yields this week could be driven by several factors, which is unusual since yields typically fall when fear levels are high.
Investors outside the United States may sell their U.S. bonds due to the trade war, and hedge funds may sell assets to raise cash to cover other losses.
Even more worrying, Trump's reckless moves to impose and remove tariffs could undermine the United States' reputation as the safest place in the world to store capital.
The U.S. dollar fell again on Friday against everything from the euro to the Japanese yen and the Canadian dollar.
Meanwhile, gold, another asset that investors instinctively turn to in moments of intense fear, has risen in price.
Sourse: breakingnews.ie
