Wall Street showed signs of recovery on Friday after a volatile week marked by concerns over the economic impact of President Donald Trump's unpredictable trade policies. Yesterday, the S&P 500 officially entered a correction phase, having lost 10% from its last peak.

This morning, the atmosphere improved, with key stocks like Meta, Nvidia, Broadcom, and Apple seeing premarket gains, while Tesla announced plans for a lower-cost Model Y in Shanghai. Applied Optoelectronics saw a 59% rise after a deal with Amazon, while DocuSign's AI-enabled offerings boosted its shares by 10%. Rubrik and Semtech also reported positive earnings, leading to stock increases.

This positive shift is largely attributed to ongoing political negotiations in Washington aimed at averting a federal government shutdown.

Investors are closely watching the U.S. Senate's progress on a stopgap spending bill, with Democrats showing support.

The University of Michigan's consumer sentiment survey is anticipated, with expectations of a further drop in the index.

This week's correction marks a significant psychological threshold for Wall Street, indicating a bearish trend. Historically, corrections do not provide clear predictions for future market movements, as they often reverse within weeks. According to data from Reuters and Wall Street statistician Ed Yardeni, there have been 56 corrections since 1929, lasting an average of 115 days and resulting in an average market loss of 13.8%. Out of these, 22 corrections escalated into bear markets, characterized by declines exceeding 20%. Currently, the U.S. stock market has decreased by 10% over 22 days, with a staggering $5 trillion in market value wiped out, equivalent to the entire value of the Indian stock market.

This downturn is influenced by several negative factors. The United States has reignited a trade war, which is eroding business confidence and raising fears of an economic recession. This has global implications, affecting markets worldwide. The Nasdaq 100 saw a significant decline, losing 1.89% in a recent session, which brings its total drop since February peaks to over 13.5%. The S&P 500 also fell by 1.4%, with the Dow Jones experiencing a similar decline. European stock indices also lost ground, although the impact was less severe compared to the U.S. markets.

In geopolitical developments, hopes for a resolution in Ukraine have diminished due to Moscow's demands. Negotiations are ongoing, with the White House actively involved in trying to expedite the process. The U.S. has increased sanctions against the Russian energy sector, employing strategies previously used by the Trump administration.

Donald Trump has threatened to impose a 200% tax on European wines and spirits in response to potential European Union retaliations against U.S. tariffs on steel and aluminum. Additionally, he has once again suggested the idea of annexing Greenland.

Investors are struggling in this period of uncertainty, with a focus on two key issues: the potential postponement of a U.S. government shutdown and the Federal Reserve's upcoming monetary policy decision. The risk of a government shutdown remains a hot topic, as investors hope for stabilization in the situation. Meanwhile, the Federal Reserve is expected to maintain current monetary levels during its decision next Wednesday. However, the central bank is likely to use its communication strategy to influence market sentiment. The Fed's language can be a powerful tool, often more impactful than direct actions, especially with the concept of the "Fed Put" resurfacing. This notion suggests that the Fed would intervene to support financial markets if conditions deteriorate significantly, as it has done in past crises over the last thirty years. The critical question is determining the threshold for the Fed's intervention, which is typically higher than investors' tolerance levels. If markets rebound, concerns may diminish, but continued declines could intensify worries about the Fed's potential actions.

Asian markets experienced a positive session, buoyed by optimism from Wall Street futures and a surge of confidence in China's economic prospects. The Shanghai and Shenzhen CSI 300, along with the Hong Kong Hang Seng, each rose by over 2%, recovering from recent declines. This upswing is largely driven by renewed enthusiasm for technological growth in China. In Japan, the market increased by 0.8%, while Australia saw a 0.5% rise. Taiwan and South Korea's markets remained stable. Conversely, India's market faced challenges, declining by 0.2%, with Mumbai's index down 15% since its peak in late September 2024. European stock markets are bullish, with the Stoxx Europe 600 up 0.8%. Wall Street opened in the green, with the Nasdaq 100 up 1.2%, the S1P 500 up 1% and the Dow Jones up 0.6%.

Today's economic highlights:

On today's agenda: the harmonized CPI of the eurozone and the CPI in Germany; the monthly GDP of the United Kingdom; the harmonized CPI of the eurozone in France; the University of Michigan sentiment in the United States. See the full calendar here.

  • Dollar index: $103.7
  • Gold: $2,994
  • Crude Oil (BRENT): $70.50 (WTI) $66.90
  • US 10-year: 4.30%
  • BITCOIN: $83,500

In corporate news:

  • Apple is negotiating with the UK and US governments regarding encryption backdoors. It is also planning an AirPods feature that can translate live conversations, Bloomberg has learned.
  • Foxconn faces financial fluctuations amid Apple's market expansions.
  • Pershing Square sold a portion of its Universal Music Group shares, valued at approximately USD 1,445 million.
  • Rusal reported a significant increase in annual net profit to $983 million.
  • Tesla plans to produce a more affordable Model Y in Shanghai by 2026. It has warned  the Trump administration that it is “exposed” to retaliatory tariffs.
  • American Airlines safely evacuated passengers from a Boeing 737-800 that caught fire.
  • UAE plans a visit to Washington to discuss investments and access to American technology.
  • PetroChina and CNOOC reduced Russian oil imports due to sanctions concerns.
  • Ulta Beauty trades 6.5% lower after hours following its quarterly results.
  • Meta is launching collective moderation inspired by X, after backing down on fact-checking.
  • Compass, Inc. is in talks to buy Warren Buffett's real estate brokerage unit, according to the WSJ.
  • Spirit Airlines has completed its restructuring after filing for bankruptcy.
  • Oracle is reportedly considering setting up a data center on the Indonesian island of Batam, according to Bloomberg.

Analyst Recommendations:

  • American Express Company: Baird upgrades to neutral from underperform with a target price of USD 265.
  • Charter Communications, Inc.: Citi upgrades to buy from rating suspended with a target price of USD 425.
  • Chipotle Mexican Grill, Inc.: Loop Capital Markets upgrades to buy from hold with a price target raised from USD 58 to USD 65.
  • Crown Castle Inc.: Raymond James upgrades to strong buy from outperform with a target price reduced from USD 128 to USD 122.
  • Equifax Inc.: BNP Paribas Exane downgrades to neutral from outperform with a target price reduced from USD 275 to USD 265.
  • Micron Technology, Inc.: Aletheia Capital Limited upgrades to buy from hold with a target price of USD 145.
  • T-Mobile Us, Inc.: Citi downgrades to neutral from buy with a target price of USD 268.
  • Cvs Health Corporation: Mizuho Securities maintains its outperform recommendation and raises the target price from USD 58 to USD 70.
  • Five Below, Inc.: Citigroup remains neutral recommendation with a price target reduced from USD 125 to USD 80.
  • Manhattan Associates, Inc.: Citigroup remains neutral recommendation with a price target reduced from USD 244 to USD 184.
  • Teradyne, Inc.: Morgan Stanley maintains its underweight recommendation and reduces the target price from 112 to USD 81.
  • Ulta Beauty, Inc.: B Riley Securities Inc. maintains a neutral recommendation with a price target reduced from USD 430 to USD 330.