NEW YORK (Reuters) - U.S. stocks rebounded on Friday as an ebbing bond rally and news of potential German economic stimulus brought buyers back to the equities market, closing the book on a tumultuous week.
While all three major U.S. stock averages ended the session higher, they still logged their third consecutive weekly losses, having been rattled since Monday by growing U.S.-China trade animosity, simmering geopolitical tensions and signals from the bond market that sparked fears of impending recession.
Germany’s coalition government is willing to suspend its balanced budget rule and take on debt, according to Der Spiegel magazine, raising hopes that Europe’s largest economy could steer itself away from recession and cooling worries over a global economic slowdown.
“The market is looking for some positive news to take into the weekend,” said Mark Kepner, equity trader at Themis Trading in Chatham, New Jersey.
David Carter, chief investment officer at Lenox Wealth Advisors in New York, agreed, but added that underlying anxieties remain.
“(It was a) great headline but further analysis may eventually create uncertainty and weaken markets,” Carter said. “The level of uncertainty around the world is rising significantly, with no clear end in sight.”
German stimulus hopes helped the benchmark 10-year U.S. Treasury yield rise from three-year lows, closing the book on a fraught week which saw 10-year yields dip below those of two-year notes, a classic recessionary red flag.
Rising bond yields gave a boost to rate-sensitive banks, sending the S&P 500 Banks index .SPXBK up 2.6%
The Dow Jones Industrial Average .DJI rose 306.62 points, or 1.2%, to 25,886.01, the S&P 500 .SPX gained 41.09 points, or 1.44%, to 2,888.69 and the Nasdaq Composite .IXIC added 129.38 points, or 1.67%, to 7,895.99.
