Wall Street posted solid gains Friday as big banks kicked off first-quarter earnings season and investors closed the book on a turbulent week of wild swings driven by the chaos of U.S. President Donald Trump's hydra-headed trade war.
All three major U.S. indexes ended the session sharply higher after assurances from Boston Federal Reserve President Susan Collins that the Fed "would absolutely be prepared" to keep financial markets functioning should the need arise.
Collins added that markets are continuing to function well, and that there are no liquidity concerns.
All three indexes posted gains from last Friday's close. Stocks were whipsawed all week by tariffs, then a reprieve on European goods and a tit-for-tat escalation in the U.S.-China trade war.
The S&P 500 notched its best weekly rally since November 2023, as a selloff in longer-term Treasuries and the dollar abated, Bloomberg reported. The S&P jumped 2% on the remarks by Collins.
"Investors are in the midst of this tug of war looking for some positive signs that the uncertainty that's really been plaguing the market will subside," said Greg Bassuk, Chief Executive Officer at AXS Investments in New York.
Uncertainty and volatility is the new investor narrative," Bassuk added. "The table is set for more volatility ahead and this week's roller coaster ride could be just foreshadowing for what's ahead."
Beijing retaliated to Trump's recent hike of tariffs to an effective rate of 145%. The trade war has caused wild intraday market swings and driven consumers' near-term inflation expectations to their hottest level since 1981.
First-quarter reporting period got off to a solid start. JPMorgan Chase, Morgan Stanley and Wells Fargo all reported better-than-expected profits, but warnings of a potential economic slowdown due to trade disputes dampened enthusiasm for the sector.
Analysts currently expect aggregate S&P 500 earnings growth of 8.0% for the first three months of the year, less optimistic than the 12.2% growth predicted at the beginning of the quarter, according to LSEG data.
Economic data offered further evidence that inflation continues to cool, with the Labor Department's Producer Prices index unexpectedly falling by 0.4% last month.
In a separate report, however, consumer sentiment soured further. One-year inflation expectations shot up to 6.7%, the highest level since 1981.
In addition to Collins' reassurances, New York Federal Reserve President John Williams said the U.S. economy is not entering a period of high inflation and low growth, and the U.S. Federal Reserve will act to keep so-called "stagflation" at bay.
All 11 major sectors in the S&P 500 were last in positive territory, with materials and technology enjoying the largest percentage gains.
According to preliminary data, the S&P 500 gained 91.35 points, or 1.73%, to end at 5,359.40 points, while the Nasdaq Composite gained 323.22 points, or 1.97%, to 16,710.54. The Dow Jones Industrial Average rose 607.62 points, or 1.53%, to 40,201.28.