(Bloomberg) — A bounce in stocks calmed nerves among equity investors, but the fallout from Donald Trump’s political maneuvering continued to shake global markets and rattle US consumers. Yields on German bonds surged as government leaders agreed on a massive defense spending package, while the ultimate haven asset — gold — topped $3,000 for the first time.
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The roughly 2% gain in the S&P 500 was set to be the biggest since the aftermath of the presidential election. Not even data showing a slide in consumer confidence prevented the market rebound. That follows a selloff that culminated in a 10% plunge of the US equity benchmark from its peak. Treasuries trimmed a recent rally fueled by a flight to safety. Bullion climbed as much as 0.5% to $3,004.94 an ounce before erasing gains.
The moves capped a week of drama that included Trump’s on-and-off-again tariffs, recession calls, geopolitical talks and concerns over a US government shutdown. Combined with all the questioning around lofty tech valuations, global equity funds saw their biggest redemption this year.
“The markets are grappling with the notion of where fair value rests for a stock market that faces headwinds from tariffs, fiscal spending cuts, and potentially softening economic data, said Yung-Yu Ma at BMO Wealth Management. “Negative investor sentiment is building, so a multi-day relief rally could be coming soon.”
Despite Friday’s advance, the S&P 500 still headed toward a fourth straight week of losses — the longest such streak since August. Trading volume was 10% below the average of the past month. Tech megacaps led gains on Friday, with Nvidia Corp. and Tesla Inc. up at least 3.3%. The Nasdaq 100 climbed 2.3%. The Dow Jones Industrial Average added 1.5%.
The yield on 10-year Treasuries advanced three basis points to 4.30%. A dollar gauge fell 0.2%.
“We are seeing some oversold rally efforts once again,” said Dan Wantrobski at Janney Montgomery Scott. “But we caution folks looking to dive back in at the first sign of stability here: nearly everyone is looking for a bottom and to ‘buy the dip’ at some point, but the current condition of the markets has not implied any real improvement on a technical basis – the tape is simply very oversold at this stage.”
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