US stocks on Friday soared and reversed the big losses they suffered just a day earlier. The Dow Jones Industrial Average rallied 746 points in the latest twist in a wild three months for markets.
Hopes for progress in a US-China trade dispute, a strong report on the US jobs market and encouraging comments from the head of the US central bank about its interest rate policy all combined to cheer investors.
The Chinese Ministry of Commerce said that trade talks would be held tomorrow and on Tuesday in Beijing, and investors will again look for signs the world’s largest economies are resolving their dispute.
The tensions have dragged on for nearly a year, slowing business and dragging down stock indices worldwide.
Meanwhile, the US Department of Labor said that US employers last month added 312,000 jobs, a far stronger result than experts had anticipated.
US stocks have tumbled since October last year, as investors worried that the economy might slow down dramatically because of challenges including the trade dispute and rising interest rates.
The stock market’s plunge also threatened to shake up the confidence and the spending plans of businesses and consumers.
Investors were acting as if a recession was on the horizon, despite a lack of evidence that the US economy is struggling, some analysts said.
“It’s hard to square recession worries with the strongest job growth we’ve seen in years,” FTSE Russell managing director of global markets research Alec Young said.
Stocks rose even further after US Federal Reserve Chairman Jerome Powell said that the central bank would be flexible in deciding if and when it raises interest rates.
The Fed is open to making changes in the way it shrinks its giant portfolio of bonds, which affects rates on long-term loans such as mortgages, he added.