Stocks rebounded Friday morning following days of declines that pushed the S&P 500 into correction territory, after Senate Democrats opted not to block a stopgap government funding bill, easing one uncertainty.
The S&P 500 rose 1% as of 10:23 a.m., with the Nasdaq Composite climbing 1.35% and the Dow Jones Industrial Average advancing 263 points, or 0.6%. The Magnificent 7 tech stocks were all up. Equities gave up some of their initial gains after the University of Michigan’s preliminary consumer sentiment index for March fell by more than expected, to 57.9.
The markets, which have been slammed by President Donald Trump’s tariff plans, got a boost after progress was made by Congress to avoid a government shutdown. Senate Majority Leader Chuck Schumer, a New York Democrat, said he would vote to keep the government open, carving a path for members of his party to join Republicans and pass a six-month spending bill ahead of a looming Friday deadline.
“You have to make these decisions based on what is best for not only your party but your country,” Schumer told reporters.
The S&P 500 index fell more than 10% from its recent peak, officially entering correction territory on Thursday. It was the fastest shift to a correction since the six trading days at the start of the Covid-19 pandemic in March 2020, according to Barron’s. Both the Nasdaq and the Dow have fallen about 4% over the past few days.
“We aren’t too surprised about the volatility of this magnitude,” said Mike Reynolds, Glenmede’s VP for investment strategy. “It’s not just the tariffs themselves that have been proposed, it’s that uncertainty that there could be additional levies just around the corner.”
The Trump administration may deal another blow next month when it imposes “reciprocal” tariffs, as these are likely to fall on countries including Vietnam, India, and Indonesia that are alternatives to China as sources of low-cost goods, Reynolds told Quartz.
The U.S. imposed new tariffs of 20% on imports from China earlier this month, along with 25% tariffs on all goods from Mexico and most goods from Canada, before enacting some exemptions for goods covered by the United States-Mexico-Canada (USMCA) agreement. Tariffs on foreign steel and aluminum went into effect earlier this week.
European wine and spirits companies’ shares fell Thursday after Trump threatened 200% tariffs on their products. The European Union has moved to hike its duties on imports of American whiskey to 50% in response to Trump’s steel and aluminum tariffs.