Risk Appetite Increases after a $5 trillion Selloff – US Market Wrap

Stocks rebounded, calming equity investors’ nerves, but the fallout from Donald Trump’s political manoeuvring continued to shake global markets and rattle US consumers. Yields on German bonds rose as government leaders agreed to a massive defence spending package, while gold, the ultimate haven asset, surpassed $3,000 for the first time.

The S&P 500 gained 2.1%, the most since the aftermath of the presidential election. Even data indicating a decline in consumer confidence did not prevent the market from rebounding. It follows a selloff that culminated in a 10% drop in the US equity benchmark from its peak. Treasuries have trimmed a recent rally fuelled by a flight to safety. Bullion rose as much as 0.5% to $3,004.94 per ounce before reversing course.

The moves capped a week of drama that included Trump’s on-and-off tariffs, recession warnings, geopolitical discussions, and concerns about a US government shutdown. Combined with all of the uncertainty surrounding lofty tech valuations, global equity funds saw their largest redemption this year, while sentiment indicators turned bearish – which can be bullish from a contrarian standpoint.

Despite Friday’s gains, the S&P 500 has lost four straight weeks, the longest such streak since August. Tech megacaps led Friday’s gains, with Nvidia and Tesla up at least 3.8%. The Nasdaq 100 rose 2.5%. The Dow Jones Industrial Average rose 1.7%.
The yield on 10-year Treasuries rose five basis points to 4.31%. A dollar index dropped 0.2%.