US stock market rebounds as government shutdown fears ease

US stocks surged on Friday, recovering some of the losses sustained earlier in the week amid growing optimism that the federal government may avoid a shutdown.

The Dow Jones Industrial Average rose 675 points, or 1.65 percent, while the S&P 500 gained 2.1 percent. The tech-heavy Nasdaq climbed 2.6 percent. However, despite these gains, each major index posted losses for the week.

The market rally followed Senate Democratic Leader Chuck Schumer’s announcement that he would vote to keep the government open, signaling that sufficient Democratic support was likely to pass a funding bill ahead of Friday’s shutdown deadline.

The positive movement in stocks offered relief for investors who had been reeling from last week's market decline, driven largely by concerns over President Donald Trump's escalating trade war and his tariff policies.

Thursday marked a significant milestone for the S&P 500, which fell more than 10 percent from its peak, officially entering market correction territory. This was the index’s first correction since October 2023.

Meanwhile, gold futures surged to a new record on Friday, breaking the USD 3,000 mark for the first time, trading at USD 3,016.30. The precious metal is often seen as a safe haven investment during periods of economic and political instability.

Despite the market struggles, President Trump remained firm on his tariff policy. When asked about a new round of tariffs set to take effect on April 2, Trump responded with a definitive "No."

After a rough Thursday, in which the Dow, S&P 500, and Nasdaq all closed lower, Friday’s rally showed investor optimism, especially with the House-passed funding bill moving forward in the Senate. Schumer’s support for the six-month Republican funding bill helped avert a government shutdown, leading to praise from President Trump.

On the economic front, US consumer sentiment dropped 6.8 points in March to 57.9, the lowest since November 2022, according to the University of Michigan’s consumer survey. Short-term inflation expectations also spiked, jumping to 4.9% in March from 4.3 percent in February, the highest since November 2022.

While tariffs remained a key focus, Friday's market gains came as investors were momentarily relieved by a lack of new developments on trade tensions. Major tech stocks also rebounded sharply, with Nvidia gaining more than 5 percent, Tesla rising nearly 4 percent, and Meta Platforms climbing almost 3 percent. Apple and Amazon also saw gains of around 2 percent.

The Dow finished the week up 1.65 percent, or 674.62 points, at 41,488.19. The S&P 500 rose 2.13 percent, or 117.42 points, to 5,638.94, while the Nasdaq Composite increased 2.61 percent, or 451.07 points, to 17,754.09. The VIX, or "fear index," dropped 11.72 percent to 21.77, signaling reduced market anxiety.