Wall Street closes the week higher and erases April losses after tariff chaos

The New York Stock Exchange closed the week higher, driven by investor optimism following the release of better-than-expected employment data and the expectation of trade negotiations with different countries and, especially, between Washington and Beijing.

The Dow Jones rose 1.39%, the Nasdaq gained 1.51%, and the S&P 500 advanced 1.47%, finally erasing the losses accumulated since April 2, when President Donald Trump announced an unprecedented tariff wave that sparked trade tensions with major U.S. partners and global economic powerhouses, including China.

In fact, after nine consecutive days of gains, the S&P 500 index managed to surpass the level prior to the so-called "Liberation Day," when Trump imposed the tariffs. The advance was supported by April's employment report, which, while below March, beat market expectations, with the U.S. economy adding 177,000 jobs in April versus March's 185,000 jobs.

Analysts had forecast the creation of 133,000 jobs. The unemployment rate held steady at 4.2%, the Labor Department reported.

Despite the rebound, the S&P 500 remains 7% below its mid-February peak, falling 5% overall since Trump took office in January.

"If the labor market holds up and the Trump administration walks back the most egregious tariffs, the economy could skirt a deep recession," said Jeffrey Roach, chief economist at LPL Financial.

"Hard economic data continues to fail to corroborate the market's worst fears about tariffs," Briefing.com's Patrick O'Hare told AFP.

Jose Torres of Interactive Brokers added that the jobs data "reassured Wall Street about the strength of the economy."

Unexpectedly, China contributed to investors' subdued optimism by communicating Friday that it is evaluating a negotiating proposal with the United States, although it warned that any breakthrough will first require the withdrawal of high tariffs imposed by Washington. President Trump, for his part, maintained that there are "good chances" of reaching a trade agreement with the Asian giant.

Likewise, Japan welcomed the talks it is holding with the Trump Administration to reach a trade agreement, communicating that it is contemplating possible economic concessions as a gesture of good faith.

However, despite the rally, investors remain cautious due to trade uncertainty, fearing especially the volatile nature of the Trump Administration.

For example, although President Trump temporarily paused some tariffs, many imports still face minimum duties of 10%, and Chinese products are taxed at rates from minimums of 145%.

In addition, a waiver allowing low-value shipments to enter from China without tariffs expired this Friday, and new 25% duties on imported auto parts go into effect Saturday, adding to the 25% tax on autos already in place since April.

The next few weeks, or perhaps months, will be key to understanding how the tariffs will actually affect the economy and how the markets will act accordingly.