Wall Street rebounds as US jobs data eases post-tariff fears

The S&P 500 surged 1.5 percent on Friday, lifting the index back above the level it held on April 2, the day Trump unveiled sweeping “reciprocal tariffs” aimed at punishing trade partners.

US stocks rallied sharply on Friday, recouping the steep losses triggered by President Donald Trump’s “liberation day” tariffs, after April jobs data exceeded expectations and helped calm jittery investors, the Financial Times reported.

The Bureau of Labor Statistics reported that the US economy added 177,000 jobs in April—comfortably above the 135,000 forecast by economists surveyed by Bloomberg. Though the figure marked a slowdown from March’s revised total of 185,000, it was seen as a reassuring sign that the labour market remains resilient.

The S&P 500 surged 1.5 percent on Friday, lifting the index back above the level it held on April 2, the day Trump unveiled sweeping “reciprocal tariffs” aimed at punishing trade partners. The benchmark has now logged nine consecutive days of gains—its longest winning streak since 2004 and one of the longest in its history, according to a Financial Times analysis.

Markets had been in turmoil since the tariff announcement, with the S&P 500 falling as much as 15 percent and volatility rippling across global equities. However, the mood has shifted in recent days, buoyed by signs of easing tensions between Washington and Beijing. On Friday, China’s commerce ministry noted that US officials had shown a “desire to engage in discussions” on trade.

“This rally seems to be on the expectation that — with regards to tariffs — the worst has passed,” said Ajay Rajadhyaksha, global chair of research at Barclays. “In fact it is exactly the contrary. The worst has not yet shown up in the data.”

Global optimism, cautious outlook

The recovery on Wall Street was mirrored in global markets. Europe’s FTSE 100 rose 1.2 percent on Friday, capping a record 15-day winning streak. Asian indices also posted multi-day gains, as investors grew hopeful that geopolitical shocks might be less disruptive than initially feared.

Still, some damage lingers. The US dollar remains nearly 4 percent below its pre-“liberation day” level. Bond markets also shifted on the jobs report, with yields on two-year Treasuries rising 0.13 percentage points to 3.83 percent as traders trimmed expectations for aggressive interest rate cuts.

While investors still anticipate at least three Fed rate cuts this year, the odds of a fourth cut dropped from 60 percent to 30 percent. Goldman Sachs pushed its forecast for the next rate cut from June to July, citing the stronger-than-expected labour data.

“People were fearful of a downside surprise that wasn’t forthcoming,” said Mike Riddell, a fund manager at Fidelity International.

Trump took to his Truth Social platform to praise the report, writing: “THE FED SHOULD LOWER ITS RATE!!! Employment strong, and much more good news.”

Musk’s layoffs, economic uncertainty ahead

The labour report also revealed the impact of recent cuts in the federal workforce, driven by Elon Musk’s controversial Department of Government Efficiency. Government employment fell by 9,000 in April and is down 26,000 since January.

The unemployment rate held steady at 4.2 percent, while March’s job growth figure was revised downward from 228,000 to 185,000.

Despite the upbeat job numbers, economists warned that the real economic impact of Trump’s tariffs may take time to materialize. Claudia Sahm, chief economist at New Century Advisors, said the initial shock has been “relatively small,” but noted that effects “will work through the system,” likely delaying Fed action.

Recent GDP data showed the first quarterly contraction in three years, though analysts said the drop was distorted by a spike in imports ahead of the tariffs. Underlying domestic demand remains robust, but the broader drag on growth is still expected to emerge in the second quarter.

“Overall this is an indication that the labour market is not deteriorating yet,” said Gennadiy Goldberg, head of US rates strategy at TD Securities. “But investors are still nervous that another shoe will drop. We just don’t know when.”