US stocks rally, but not enough to end fourth consecutive losing week

US stocks saw a rally on Friday, though it wasn’t enough to stop Wall Street from heading toward its fourth consecutive losing week, marking its longest such streak since August. The S&P 500 surged 1.9% during midday trading, following its 10% drop below its record high—a “correction” marking the first since 2023.
The index was on track for its best day since the day after President Donald Trump’s election, when investors were mostly optimistic about tax cuts and other benefits for corporate profits.
The Dow Jones Industrial Average climbed by 625 points, or 1.5%, while the Nasdaq composite rose 2.4% in midday trading, news agency AP reported.
Yung-Yu Ma, chief investment officer at BMO Wealth Management, noted that a multi-day “relief rally” could be on the horizon after so much negativity had built up among investors. Ma explained that sentiment swings rarely last in one direction forever, and theUS stock market has been in a swift downturn since hitting a record less than a month ago.
One source of uncertainty over Wall Street may be clearing up as the Senate takes steps to avert a potential partialUS government shutdown, which is set to occur by midnight. While past shutdowns have not caused significant disruptions in financial markets, any clarity surrounding such events can ease investor concerns during a time of heightened volatility.
Despite this, the largest cloud over the market remains the ongoing trade war initiated by President Trump. Investors are uncertain about the extent to which the administration will allow economic pain through tariffs and other policies in its push for reshapingUS manufacturing and government size. Trump has expressed a desire to bring manufacturing jobs back to theUS and reduce the size of the federal workforce, among other changes.
Although the stock market is close to completing its correction, concerns linger about how much of an impact federal spending cuts may have on the economy. Yung-Yu Ma suggested that these worries, along with Trump’s unpredictable tariff policies, are likely to persist in the near future.
The ongoing uncertainties are already affecting consumer confidence, as evidenced by a preliminary survey from the University of Michigan released on Friday. Consumer sentiment dropped for the third consecutive month, primarily driven by concerns over the future. The job market and the overall economy appear relatively stable at the moment, but the survey found that the high level of uncertainty around policy and other economic factors makes it difficult for consumers to plan for the future.
Expectations for inflation in the long term surged, jumping to 3.9% from last month’s 3.5%. This marks the largest increase in the inflation outlook since 1993.
On Wall Street, attention is focused on whether these consumer concerns are affecting businesses. Ulta Beauty, for instance, saw a 12.3% increase in stock price after reporting better-than-expected profits for the most recent quarter. However, the company’s forecast for upcoming revenue and profits fell short of analysts’ expectations, prompting the CFO to express caution in light of ongoing consumer uncertainty. Despite this, analysts said the forecast was better than anticipated.
Big Tech and artificial intelligence stocks, which had suffered the most in recent sell-offs, also helped to prop up the market. Nvidia, for instance, rose 4.6%, cutting its 2025 loss to 10%, while Apple climbed 1.7%, reducing its loss for the week, which had been on track to be its worst since the 2020 COVID crash.
Globally, stock markets were more optimistic, with indexes in Europe and Asia rising. Hong Kong’s index rose 2.1%, while Shanghai’s jumped 1.8%, after China’s National Financial Regulatory Administration issued new guidance aimed at boosting consumer spending. The announcement encouraged financial institutions to support consumer credit and assist struggling borrowers.
Economists argue that China needs to encourage more consumer spending to rejuvenate its economy. However, many are calling for broader reforms, such as increases in wages, social welfare, and investment in public health and education.
In the bond market, Treasury yields recovered some of their recent sharp losses. The yield on the 10-year Treasury rose to 4.30% from 4.27% late Thursday, and up from 4.16% at the beginning of last week. Yields have fluctuated significantly since January, when they were near 4.80%. The movement of yields tends to reflect investor sentiment: when concerns about theUS economy grow, yields fall, and when worries about inflation rise, yields climb.