They were off after the tariffs continued. At least temporarily, and only a few of them were hit by a more sudden duty, not China, and quickly fought back. Wall Street got caught up in and then rebounded to its strongest weekly profit in over a year.
Last week we saw a series of changes in US trade policies, in which economists, investors and ordinary consumers are increasingly concerned, driving inflation or causing a recession.
“The economy is facing considerable turbulence,” JP Morgan CEO Jamie Dimon said Friday when the bank reported strong revenues while warning of future pitfalls. Both JP Morgans are looking at the odds of 50-50 this year’s recession, but Morgan Stanley has increased revenue from stock trading activities as investors compete to adjust their holdings in the face of growing uncertainty.
The US major stock index closed on high Friday after a massive week of losses and profit volatility. The 11-hour rebound came after White House spokesman Caroline Leavitt signaled President Donald Trump to be “optimistic” for a trade deal with China.
The Dow Jones industrial average concluded 4.9% a week, while the high-tech Nasdaq composite rose 7.3%. The S&P 500 had its best week since November 2023, reaching 5.7%. That broad index has still fallen 5.5% since April 1, the day before Trump announced a sweeping slate of fresh tariffs.
Many of these new import taxes have been cut for several months, but market watchers and financial executives say there are still major economic headwinds.
“A timely solution that benefits the US is good for businesses, consumers and markets,” Wells Fargo told investors on Friday about global trade tensions. In the meantime, “We are looking forward to continuing volatility and uncertainty and preparing for a slower economic environment in 2025,” the bank said.
Larry Fink, CEO of BlackRock, the world’s largest asset manager, told CNBC on Friday that he thinks the US economy is “very close, if not now.” (Formal resolutions on that front can usually be made only by the National Bureau of Economic Research’s Experts panel, months after fact.)
Meanwhile, consumer sentiment plunged to 11% from last month, according to a University of Michigan reading on Friday.
“Consumers have reported multiple warning signs that increase the risk of a recession. Business conditions, personal finances, income, inflation, and labour market expectations continued to deteriorate this month,” the researchers wrote.
The investigation took place before Trump changed his mind about the tariffs he announced just a week ago, covering nearly 90 countries. He said that he came to the decision as more than 75 people did not retaliate and reached out to negotiate.
However, temporary policy rollbacks do not apply to China. Beijing retaliated on Friday with a 125% mandatory duty on US goods after Trump announced he was hiking the country’s tariffs to 145%.
Investors say they don’t know exactly how the global trade picture will shake. Morgan Stanley said in a memo on Friday that Trump’s 90-day residency would “simply increase policy uncertainty,” leaving effective tariff rates at the century-long highs.
“Tax delays are beneficial in margins, but that’s not the same as their removal,” they wrote. “History suggests that increasing uncertainty, which emphasizes business trust, can have a detrimental impact on business spending and employment.”
Inflation eased more than expected in March, with government figures released on Thursday immersing itself in an annual rate of 2.4%, and wholesale prices also cooled unexpectedly last month. However, analysts were quickly discounting the encouragement data.
“That was good, but don’t get used to it,” Bankrate Chief Financial Analyst Greg McBride said in a statement Thursday, citing widespread signs of uncertainty across the consumer economy.
Experts have already warned that from customs duties, from clothing and auto parts to staple foods like coffee, nuts and seafood, they are on track to become even more expensive for months. Price increases are also available for items produced widely in China, including toys, video game consoles, and electronics.
Barclays analysts said Thursday that retail and import data suggests that many consumers are “finally implementing these tariffs to some extent by making large purchases in February and March,” and are looking to get other items that have produced Chinese-made gadgets and other items overseas before prices rise. Warehouse Club’s foot traffic jumped nearly 10% last week, days before Trump’s April 2nd tariff rollout, last week in the last week of March, according to Placer.AI tracking data.
Barclays researchers said they hope that price pressures will ease throughout the year “because companies have fewer deals with China and sources where average tariffs are expected to remain near 10%.” However, the bank foresees an overall rise inflation to 4.1% by the end of this year.
“Armageddon, the economic tariff where Trump was unleashed last week, has been a dark, dark cloud beyond stocks since the start of this fiasco,” an analyst at Wedbush Securities wrote in a note to his client on Friday. The impact has been felt primarily on Wall Street so far, they said, but “it’s all about to change.”