Investing.com -- Stocks rebounded on Friday, recouping some of the week’s sharp losses as concerns over tariffs temporarily eased.
The Dow Jones Industrial Average gained 674.62 points, or 1.65%, closing at 41,488.19. The S&P 500 rose 2.13% to 5,638.94, while the Nasdaq Composite climbed 2.61% to 17,754.09. It marked the strongest session of the year for both the S&P 500 and Nasdaq.
Big tech stocks, which had been under pressure earlier in the week, led the recovery. Nvidia (NASDAQ:NVDA) surged more than 5%, while Tesla (NASDAQ:TSLA) gained nearly 4%. Meta (NASDAQ:META), Amazon (NASDAQ:AMZN), and Apple (NASDAQ:AAPL) also advanced.
The rally came as investors found relief in the absence of fresh tariff-related news from Washington, easing fears of escalating trade tensions. Some also saw an opportunity to buy into the market after Thursday’s pullback.
Despite the rebound, all three major indexes posted weekly declines. The Dow dropped about 3.1%, its worst week since March 2023, while the S&P 500 and Nasdaq each fell over 2%, extending their losing streak to a fourth week.
This week, attention will be on the Federal Reserve’s policy decision on Wednesday, as investors assess the central bank’s stance amid signs of slowing economic growth.
Most nowcast models suggest a first-quarter slowdown, with the Atlanta Fed’s GDPNow even signaling a 2.4% annualized contraction. However, this may exaggerate the weakness.
Survey data, including the S&P Global PMI, point to a more moderate deceleration, though February’s readings suggest a growth rate of just 0.6%. Businesses cite weaker demand due to federal budget cuts and uncertainty around tariffs.
The Fed is expected to keep interest rates unchanged on Wednesday, but investors will be watching for any signals that policymakers are preparing for rate cuts later this year.
"The stock market is trying to get any type of insight as to when the Fed will be comfortable enough to implement their next rate cut," Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth said.
"I don’t think the onslaught of headlines and new policies coming from the White House is going to stop anytime soon."
Beyond the Fed’s rate decision, markets will closely analyze updated economic projections and the latest “dot plot” for insight into policymakers’ rate outlook.
Key U.S. data releases this week include retail sales, industrial production, and housing indicators, such as housing starts, building permits, and existing home sales.
Earnings watch: Micron, Nike to report
Along with new economic data and the FOMC meeting, investors will also be watching upcoming earnings reports this week.
Micron Technology Inc (NASDAQ:MU), a key semiconductor manufacturer specializing in memory chips for AI processing, is scheduled to report on Thursday.
Analysts at Citigroup (NYSE:C) expect the company to post “decent results” but anticipate guidance to come in below consensus due to “worse consumer mix and NAND underutilization charges.”
However, mainstream DDR5 spot prices are rising, up nearly 8% year-to-date—the largest increase since the first quarter of 2024. This reinforces Citi’s view that DRAM pricing is set to improve starting in the second quarter of 2025.
“We remain optimistic on Micron given their AI HBM opportunity and bullish on the DRAM recovery given supply/demand dynamics for 2025, and our fiscal 2026 EPS estimate is 39% above consensus.”
Apart from Micron, electric vehicle (EV) maker Xpeng (NYSE:XPEV), Nike (NYSE:NKE), Accenture (NYSE:ACN), and Lululemon Athletica (NASDAQ:LULU) will also report their latest financial results this week.
What analysts are saying about U.S. stocks
BTIG: “Markets finally got some long overdue relief on Friday with the strongest NYSE upside volume day (90%) since last August. We think that should set the stage for further upside relief in the SPX back towards the 5800-5900 level before running into trouble again. While that makes U.S. markets attractive from a tactical trading standpoint, we think the bigger picture trends continue to favor ex-U.S. markets.”
JPMorgan: “Given the recent 10% SPX drawdown, Bull-Bear at extremes could offer some technical support short term. Big picture though, our view remains that the growth scare risks will keep returning, resulting in renewed pressure on equities, capping bond yields, and driving another leg in Defensive sector leadership.”
“We reiterate the call that one should be cautious on Growth style, on Mag-7, and on U.S. Tech this year, expecting these groups to lag the market, which implicitly leads to broadening, and better performance of SPW vs SPX.”
Morgan Stanley: “With the S&P trading at the low end of our 1H range, a tradable rally is likely. Sentiment/positioning are lighter, seasonality is improving, and the DXY/10Y yield are down 6%/50bps over the last 2 months. This doesn’t mean growth risks are extinguished. Volatility is likely to persist in ’25.”
Yardeni Research: “We aren’t convinced that the correction is over despite Friday’s rally and extremely bearish sentiment readings, which tend to be bullish from a contrarian perspective.”
“We will feel better about calling a stock market bottom when the market is no longer "tarrified" by Trump’s tariff threats and actions. It might bottom after April 2, when Trump imposes reciprocal tariffs all around the world, if they lead to tariff- reduction negotiations.”
Evercore ISI: “The S&P 500 falling through 5,700 without meaningful reprieve has highlighted Trump is less focused on markets, raising the chances of S&P 500 5,200 by end-2025 under our Bear Case. Yet even under our Base Case, investor fear is unlikely to morph into 2018-like Bear Market style derisking. The major catalysts that “Kill a Bull market” – FOMO, rising bond yields, an uncooperative Fed and Recession – remain absent.”