Wall Street rallied on Friday to settle higher after a roller-coaster week, lifted by the Federal Reserve's stance that it will hold off on lowering interest rates given a “good” US economy and the turmoil surrounding the Trump administration's tariff policies.
Fed chairman Jerome Powell on Friday indicated the central bank is likely to hold rates because of the uncertainty surrounding President Donald Trump's approach to tariffs.
Most economists argue that Mr Trump's plans to place 25 per cent tariffs on Mexico and Canada – America's two biggest trading partners – will lead to slower growth and higher inflation. Mr Trump's on-again, off-again approach towards their implementation has brought uncertainty towards the economic outlook, bruising US markets in a week of volatile trading.
“Investors are clearly questioning whether the US economy is being steered by a sound financial strategy or by impulsive political manoeuvring,” said Nigel Green, chief executive of global financial advisory firm deVere Group.
“Markets thrive on stability and predictability – two qualities that are in short supply under an erratic approach to global trade.”
Despite the uncertainty, Mr Powell said the economy is “in a good place”.
“We are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry, and are well positioned to wait for greater clarity,” Mr Powell said in remarks at the University of Chicago Booth School of Business 2025 US Monetary Policy Forum in New York.
“It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy,” he said.
His remarks came shortly after new data showed the US added a soft – but still solid – 151,000 jobs in February while the unemployment rate slightly rose to 4.1 per cent.
Meanwhile, the Fed's separate data showed its preferred inflation measure slowed last month to 2.5 per cent year-on-year, still half a per cent above its long-term target.
“The worse-case scenario for the markets would be a lower-than-expected NFP [nonfarm payroll] print combined with higher-than-expected wages growth – a combination that would leave the Fed facing a slowing economy with limited room to give support,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
On Wall Street, the S&P 500 settled 0.6 higher, the Dow Jones Industrial Average rose 0.5 per cent and the technology-heavy Nasdaq Composite added 0.7 per cent.
For the week, the S&P 500 retreated 3.1 per cent, the Dow declined 2.4 per cent and the Nasdaq shed 3.5 per cent. Year-to-date, the Dow is up 0.6 per cent, while the S&P 500 and Nasdaq have given up 1.9 per cent and 5.8 per cent, respectively.
In Europe, major indices were mostly down as the European Central Bank on Thursday slashed borrowing costs again in a bid to prop up a tepid eurozone economy.
However, the cut – the sixth since June last year – came before official data showed that the eurozone economy expanded by 0.9 per cent in 2024, which was better than expected.
London's FTSE 100 settled flat, while the Paris CAC 40 shed 1 per cent and Frankfurt's DAX slid 1.8 per cent.
Earlier. in Asia, major stock markets retreated on Mr Trump's tariff actions and while awaiting the results of the US jobs report, with Tokyo's Nikkei 225 diving nearly 2.2 per cent, while Hong Kong's Hang Seng index lost about 0.6 per cent.
The Shanghai Composite shed 0.25 per cent, but investors remained optimistic after Beijing announced a 5 per cent economic growth target on Wednesday, lifting equities.
In commodities, oil prices settled higher but posted their worst weekly loss since October on Mr Trump’s tariff policies and prospects of higher crude supply in the market.
Brent jumped 1.3 per cent to close at $70.36 a barrel, while West Texas Intermediate added 1.02 per cent to settle at $67.04 a barrel.
Gold, meanwhile, inched down, but still posted a weekly gain, on the back of its safe-haven appeal amid economic uncertainty. Spot gold declined 0.31 per cent to settle at $2,911.17 an ounce.
