Dow Jones: Rebounds 400 Points, But US Indices Face Worst Weekly Drop in Two Years

Dow Rebounds 400 Points, But Set for Worst Weekly Loss in Two Years

Stocks bounced back Friday, but major indexes remained on track for steep weekly losses as tariff-related uncertainty and weak consumer sentiment continued weighing on markets.

The Dow Jones Industrial Average climbed 421 points, or 1%, while the S&P 500 rose 1.4%. The Nasdaq Composite led gains with a 1.7% advance, supported by a 4% jump in Nvidia and solid performances from Tesla, Meta, Amazon, and Apple. However, all three major indexes were still heading for their fourth straight weekly decline.

What Drove Friday’s Gains?

Investor sentiment improved after Senate Minority Leader Chuck Schumer indicated he wouldn’t block a Republican funding bill, reducing concerns over a potential government shutdown.

In corporate news, blue-chip stocks posted solid gains. Goldman Sachs surged 2.3%, while JPMorgan Chase and American Express rose over 2.5% each. Caterpillar added nearly 2%, helping lift the Dow. However, losses in Johnson & Johnson, Procter & Gamble, and Merck weighed on the index.

S&P 500 in Correction, Nasdaq Nearing Bear Market

Despite Friday’s rally, markets remained under pressure. Thursday’s 1.4% drop pushed the S&P 500 into correction territory, now down more than 10% from its recent high. The Nasdaq Composite has lost over 9% year-to-date, while the Russell 2000 is down nearly 18%, approaching bear market levels.

The sell-off has been driven largely by concerns over President Donald Trump’s shifting tariff policies, which have increased market uncertainty over the past three weeks. Deutsche Bank noted that the S&P 500 is set for its worst weekly performance since the Silicon Valley Bank collapse, with losses exceeding 4% this week.

Consumer Confidence and Treasury Yields Add Pressure

Economic data released Friday reinforced investor concerns. The University of Michigan’s Consumer Sentiment Index fell to 57.9, well below the 63.2 estimate, signaling growing economic uncertainty. Rising inflation expectations and a climb in the 10-year Treasury yield further pressured markets.

Portfolio manager Thomas Martin of Globalt Investments noted that despite the rebound, traders remain cautious. “Sentiment is deteriorating, and higher yields could limit upside momentum,” he said.

Fed Policy Meeting in Focus

Looking ahead, traders are closely watching next week’s Federal Reserve policy meeting. Futures pricing suggests a 97% probability that the Fed will hold rates steady. However, investors will scrutinize Chair Jerome Powell’s comments for any signs of a policy shift.

With markets in correction mode and economic uncertainty lingering, traders will need to assess whether Friday’s rebound has staying power or if further downside risks remain.

More Information in our Economic Calendar.