U.S. Stocks Rebound Sharply After Trump’s “Liberation Day” Tariff Announcement

U.S. stocks staged a strong comeback on Friday, erasing major losses triggered a month ago by former President Donald Trump’s surprise tariff announcement. The rally followed a stronger-than-expected U.S. jobs report, signaling resilience in the labor market despite recent economic volatility.

Stronger Jobs Report Fuels Market Rebound

According to the U.S. Bureau of Labor Statistics, 177,000 new jobs were created in April, exceeding the 135,000 forecasted by economists surveyed by Bloomberg. While slightly lower than March’s revised figure of 185,000, the data suggested continued labor market strength.

The S&P 500 jumped 1.5% on Friday, pushing it above its April 2 closing level—the same day Trump revealed his retaliatory tariff plan dubbed “Liberation Day.” Friday’s gain marked the ninth consecutive daily increase for the index, the longest such streak since 2004, and one of the longest on record, according to the Financial Times.

Global Markets Stabilize Amid Easing Trade Tensions

Wall Street’s recovery mirrored gains in global markets. In Asia-Pacific and across Europe, equity benchmarks posted several days of growth as fears over Trump’s tariffs began to ease. Notably, the UK’s FTSE 100 rose 1.2% on Friday, marking its 15th consecutive daily gain—the longest winning streak in its history.

The initial selloff following Trump’s announcement had sent the S&P 500 down as much as 15%, sparking turmoil in financial markets worldwide. But hopes of trade dialogue were renewed Friday after China’s Ministry of Commerce said Washington had recently expressed a “desire to engage” in discussions.

Investor Sentiment Mixed Despite Rally

Ajay Rajadhyaksha, global research head at Barclays, commented that the market surge likely stems from expectations that “the worst is over” concerning tariffs. “But in reality, the worst hasn’t yet shown up in the data,” he cautioned.

Despite the stock market rebound, the U.S. dollar remained nearly 4% below its pre-announcement level. The two-year Treasury yield—often seen as a proxy for interest rate expectations—rose 0.13 percentage points to 3.83% as investors bet the Federal Reserve will keep rates elevated longer.

Market expectations for rate cuts shifted slightly: traders still anticipate at least three cuts this year, but the probability of a fourth has dropped from around 60% to just 30%.

Political Pressure and Labor Market Impact

Following the jobs report, Trump took to Truth Social to demand action from the Fed, posting: “THE FED SHOULD CUT RATES!!!” and touting the “strong job numbers and more good news to come.”

April’s job data came in the wake of sweeping federal layoffs by Elon Musk’s Department of Government Efficiency, which contributed to a net decline of 9,000 federal jobs last month and 26,000 since January.

Meanwhile, the unemployment rate remained steady at 4.2%.

Outlook Remains Uncertain

Despite the headline gains, Claudia Sahm, chief economist at New Century Advisors, cautioned that Trump’s economic policies—though “not subtle”—may take time to ripple through the economy. “It means the Fed will have to wait,” she said, adding that meaningful rate cuts may not come until later in the second half of the year.

First-quarter GDP data showed a decline for the first time in three years, driven by a surge in imports ahead of Trump’s tariff rollout, even as domestic demand held up.

Gennadiy Goldberg, U.S. rates strategist at TD Securities, summed up investor sentiment: “This shows the labor market hasn’t broken yet. But investors are nervous that something else will. We just don’t know what—or when.”

Conclusion

While Friday’s labor report offered short-term relief and helped reverse weeks of market decline, the road ahead remains murky. With geopolitical risks, unpredictable policy shifts, and Fed rate decisions looming, investors appear cautiously optimistic but remain braced for further turbulence.

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