The Dow shot higher Friday, as investors look to cap off a wild week for Wall Street on a high note.
US stocks rose after bond yields edged up and Europe and China announced plans for additional stimulus to shore up their economies in the wake of a global trade war.
China’s National Development and Reform Commission said Friday it would boost stimulus to shore up the country’s economy, stabilize employment and give people more disposable income. Although China didn’t elaborate on its plans, that was enough to soothe investors’ fears about the trade war’s harm to the global economy.
China’s stimulus announcement followed Hong Kong’s $19 billion stimulus package, unveiled Thursday, designed to avert a recession in the wake of crippling protests.
A European Central Bank official said late Thursday the central bank would unveil several substantial stimulus measures next month. The ECB had already hinted it would increase stimulus for Europe, but Finland’s Central Bank Governor Ollie Rehn told the Wall Street Journal that the packages of policies to boost the European economy would be better than investors anticipated. He said a big, bold plan would be more effective than series of smaller moves.
The Dow was about 300 points higher late morning. The S&P 500 rose 1.4% and the Nasdaq was up 1.7%.
This week has given investors whiplash. CNN Business’ Fear and Greed Index continues to show investors are motivated by “extreme fear.”
The Dow closed 100 points higher in a wacky session Thursday, as conflicting signals in the economy confused investors. Stocks were up and down all day.
Wednesday, stocks posted their worst day of the year. The Dow was down 800 points, and the broader S&P 500 fell 3%. The bond market flashed a recession warning, as the yield on the 10-year Treasury briefly fell below the yield on the 2-year Treasury. That rare scenario, called an inverted yield curve, has preceded every recession in the modern era.
Tuesday, stocks soared. The Dow rose nearly 400 points after the Trump administration delayed some tariffs on tech products. But the Dow fell 400 points Monday in an end-of-day rout as investors feared an escalation in the trade war.