While Thursday marked Wall Street's third rally in a row, given three topsy-turvy weeks of tariff headlines, and the ugly selloff four sessions ago, it is premature to declare "confidence is back!"
The S&P 500 is up six-plus percent since Tuesday, but is still down about 10% from its record close on February 19 and down more than 3% since U.S. President Donald Trump's ill-received April 2 "Liberation Day" tariff news conference.
But some okay earnings reports have stabilized the mood of investors, if not of business which has yet to feel the full brunt of whatever tariff regime is left on the books.
ServiceNow's shares jumped 14.8% on profit that was better than expected due to resilient demand for AI-powered software. The release of Alphabet earnings after the market close could provide more information on how AI investments are paying off.
Beijing said the U.S. should remove all "unilateral tariff measures" against China "if it truly wanted" to solve the trade issue. It also said there have been no economic and trade negotiations between the two countries, which Trump refuted. So the confusion continues.
The White House on Wednesday signaled it was open to reducing sweeping tariffs on China, floating a reduction in the rate to 50% to 60% from the 145% Trump decreed in the initial walk back of aggressive levies on most other trading partners.
About 73.9% of the 157 companies in the S&P 500 that have reported first-quarter earnings to date have exceeded analyst expectations even amid tariff uncertainty, according to LSEG data. Even so, businesses across multiple industries are saying they're increasing prices and uncertain about the outlook because of Trump's trade policies.
The dollar pulled back following an interlude of trade optimism on Wednesday, but not all the way to its lows during the worst of the backlash against U.S. assets.
Treasuries held up amid hopes that any tariff war won't be as bad as it could have been, so yields fell but remained in range established during the bond and dollar rout.
Market concerns around a meaningful retreat of foreign buyers, were partly assuaged this week, as Treasury auction allocation data on Wednesday showed solid foreign demand for a 10-year auction earlier this month, when the bond market was selling off amid tariff-induced volatility.
