Wall Street experienced an unexpected rebound from early losses on Wednesday, as the S&P 500 rose 0.1% to extend its winning streak to a seventh day. The Dow Jones Industrial Average added 141 points, or 0.3%, while the Nasdaq composite edged down by 0.1%.
The surprise reversal came after the S&P 500 plummeted as much as 2.3% and the Dow fell 780 points in early trading. Stocks initially tumbled following a report that suggested the US economy may have shrunk at the start of the year, falling short of economists’ expectations.
The data raised concerns about a potential “stagflation” scenario, where the economy stagnates yet inflation remains high. Economists fear this scenario because the Federal Reserve has limited tools to address both issues simultaneously.
However, later reports showed that the measure of inflation slowed in March, decelerating to 2.3% and closer to the Fed’s goal of 2%. This news helped stocks parry their losses almost immediately.
The US job market also received a mixed report on Wednesday, with ADP suggesting employers outside the government hired fewer workers than expected in April. The full job market picture will be revealed in Friday’s data from the U.S. government.
The rebound on Wall Street is partly attributed to uncertainty around President Donald Trump’s trade war, which has created deep uncertainty and triggered historic swings for financial markets. Despite this, some analysts believe that Trump may relent on some of his tariffs, providing a glimmer of hope for the market.
As the S&P 500 ended April with a decline of just 0.8%, it’s only 9.4% below its record. Stronger-than-expected profit reports from big US companies have supported the market, and storage companies like Seagate Technology jumped 11.6% on Wednesday.
The Dow Jones Industrial Average rose to 40,669.36, while the Nasdaq composite fell to 17,446.34. Despite a third straight losing month for the S&P 500, the rebound offers a cautious optimism for the market’s future.
Source: https://apnews.com/article/stocks-markets-autos-tariffs-trump-earnings-bbad7ca16bceb8c35822d906b195f5d2