Stocks whipsawed on Friday, abruptly ending a three-day relief rally that had buoyed investor sentiment and put major indexes on track for weekly gains. As of early afternoon, the Dow Jones Industrial Average slipped 76 points, or 0.2%, to 40,017, while the S&P 500 inched up 24 points, or 0.4%, to 5,509. The Nasdaq Composite climbed 0.9%, powered by a handful of Big Tech names.
This choppiness comes as investors digest a flurry of mixed signals on the U.S.-China trade front—an issue that has dominated market direction all week. President Trump’s more conciliatory tone on trade helped ignite the recent rally, as traders anticipated potential tariff de-escalation. However, hopes for an imminent breakthrough were tempered today by China’s denial of active negotiations, even as the country rolled back some of its steep retaliatory tariffs on U.S. semiconductors, hinting at a possible softening stance.
For traders, the day’s volatility is a clear reflection of the headline-driven environment. As Bret Kenwell of eToro put it, “We’re in a headline driven market, and we’re prone to volatility spikes and outsized trading ranges in both directions. And you know, it’s probably going to remain that type of market until we at least have more clarity on what’s going on.”
Adding to the uncertainty, several leading U.S. corporations sounded the alarm on the difficulty of forecasting business performance amid global trade tensions. Intel tumbled nearly 7% after warning of “elevated uncertainty across the industry” and falling short on future revenue guidance, despite strong Q1 results. Eastman Chemical slid almost 6% following a similarly cautious outlook, while Skechers U.S.A. dropped over 4% after pulling its full-year guidance due to ongoing policy unpredictability—even as it reported record quarterly revenue.
Not all news was bearish: lower 10-year Treasury yields, down to 4.28% from 4.32%, and a strengthening U.S. dollar index offered some relief to investors wary of inflation and capital flows. Meanwhile, the tech sector continued to bolster the Nasdaq, with notable strength from heavyweight AI and cloud companies.
Market participants are also keeping a close eye on the White House’s ongoing talks with dozens of countries. The recent 90-day pause in new “reciprocal” tariffs delivered a brief reprieve, though analysts warn that even if tariffs are reduced—from current highs of 145% on Chinese imports to a possible 50-65%—the remaining levies could still weigh heavily on economic growth and corporate profits.
“We expect equity markets to remain choppy, but the risk-reward for stocks is looking more appealing, especially now that we know that Trump is attuned to the risks from his tariff policies,” said David Lefkowitz, head of US equities at UBS Global Wealth Management. He anticipates a rebound next year as businesses and consumers adjust and the Fed contemplates rate cuts.
For stock traders and market investors, today’s action underscores the critical importance of agility and an ear to the ground for policy developments. The tug-of-war between tariff relief and lingering trade tensions, paired with corporate caution, means volatility is likely to remain elevated. This environment favors nimble strategies and heightened risk management.
As the week closes, the message for the market is unmistakable: in this policy-driven climate, expect sharp moves in both directions and stay prepared for the next headline to move stocks.
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