US stocks surged sharply on Friday, rebounding from significant losses caused by President Donald Trump’s controversial tariff policies. The rally was fueled by a stronger-than-expected April jobs report, easing concerns among investors who had been rattled by recent market volatility. According to the Bureau of Labor Statistics, the US economy added 177,000 jobs in April, exceeding the 135,000 forecast by economists surveyed by Bloomberg. Although the job growth was slower than March’s revised total of 185,000, it showed that the labor market remains robust and resilient.
The April jobs data provided much-needed optimism, lifting the S&P 500 index by 1.5 percent. This surge brought the benchmark index back above its April 2 level—the day President Trump unveiled sweeping “reciprocal tariffs” aimed at punishing trade partners. The S&P 500 has now recorded nine consecutive days of gains, marking its longest winning streak since 2004. This recovery came after a period of market turmoil triggered by the tariff announcements, which saw the index drop by as much as 15 percent.
A Shift in Market Sentiment Amid Easing Trade Tensions
Since Trump’s announcement of the tariffs, global markets had been in a state of turmoil, with investors fearing an escalating trade war. However, recent signs of reduced tensions between Washington and Beijing have helped to shift market sentiment. On Friday, China’s commerce ministry indicated that US officials had expressed a “desire to engage in discussions” on trade, which reassured investors that the worst may be behind them.
Despite the upbeat mood, some market analysts caution that the full impact of the tariffs is yet to be felt. “This rally seems to be on the expectation that — with regards to tariffs — the worst has passed,” said Ajay Rajadhyaksha, global chair of research at Barclays. “In fact, it is exactly the contrary. The worst has not yet shown up in the data.”
Jobs Report: Global Market Recovery Echoes US Rally
Wall Street Rebounds Following Strong April Jobs Data. The optimism on Wall Street was mirrored in global markets. In Europe, the FTSE 100 rose by 1.2 percent on Friday, closing out a record 15-day winning streak. Asian stock indices also posted multi-day gains, with investors hopeful that geopolitical disruptions, while still concerning, may not be as severe as initially feared.
Even though market sentiment has improved, the US dollar remains almost 4 percent below its level before Trump’s tariff announcement. Bond markets have also seen a shift in response to the latest jobs report, with yields on two-year US Treasuries rising by 0.13 percentage points to 3.83 percent. Traders adjusted their expectations for aggressive Federal Reserve rate cuts, reducing the likelihood of a fourth rate cut from 60 percent to 30 percent.
Jobs Report Today: Federal Reserve Rate Cut Expectations Adjusted
Although market participants still expect at least three Federal Reserve rate cuts this year, the stronger-than-expected jobs data has led some analysts to adjust their predictions. Goldman Sachs moved its forecast for the next rate cut from June to July. The adjustment came after the jobs report showed stronger-than-anticipated job growth, which may delay any immediate need for the Fed to take action.
“People were fearful of a downside surprise that wasn’t forthcoming,” said Mike Riddell, a fund manager at Fidelity International. His comment reflected the market’s concern that the US economy might not be as vulnerable as some had feared. The solid April jobs report provided a sense of reassurance, offering investors a more optimistic outlook on the economy’s health.
President Trump, ever vocal about economic matters, also took to his Truth Social platform to praise the positive jobs data. “THE FED SHOULD LOWER ITS RATE!!! Employment strong, and much more good news,” he wrote, highlighting the optimistic view shared by many investors and economic analysts.
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The Impact of Government Layoffs Amid Tariff Concerns
US Jobs Report Outperforms Expectations, Lifts Stocks After Tariff Turmoi. Despite the overall positive jobs data, the report also revealed the ongoing effects of government layoffs, a consequence of Elon Musk’s controversial Department of Government Efficiency. Government employment fell by 9,000 jobs in April, bringing the total decline in federal employment since January to 26,000 jobs.
While the jobs report suggests that the broader labor market remains resilient, economists continue to express concerns over the long-term impact of the tariff policies. Claudia Sahm, chief economist at New Century Advisors, noted that the initial impact of the tariffs has been “relatively small.” However, she warned that the effects would likely unfold over time, with a more noticeable economic impact to come in the months ahead.
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Signs of Slower Growth in the Broader Economy
Recent data on US GDP also indicated signs of slower growth. The economy contracted in the first quarter of the year for the first time in three years. However, analysts believe that the contraction was partly due to a surge in imports as companies rushed to stockpile goods before the tariffs took effect. While domestic demand remains strong, economists expect that the broader drag on economic growth will become more apparent in the second quarter.
“The labor market is not deteriorating yet,” said Gennadiy Goldberg, head of US rates strategy at TD Securities. “But investors are still nervous that another shoe will drop. We just don’t know when.” This uncertainty surrounding the full effects of the tariffs continues to make investors cautious, even as the immediate economic picture seems stable.
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Looking Ahead: Economic Uncertainty Lingers
Despite the positive news from the jobs report, the overall economic outlook remains uncertain. The combination of trade tensions, tariff policies, and potential disruptions to global supply chains continue to pose risks to the US economy. The Federal Reserve’s response to these uncertainties, particularly regarding interest rate cuts, will be closely watched in the coming months.
As the markets digest the latest data, analysts and investors are left to grapple with the question of how much further the economy can withstand the weight of ongoing trade disputes and the wider global economic challenges. While the recovery in stock markets is encouraging, the lingering threat of future disruptions keeps many on edge.
