Stocks higher despite tariff talk

U.S. stocks ended a volatile session higher, paring a weekly decline, as investors speculated that President Donald Trump’s tough tariff talk won’t translate into the most severe protectionist policies.

The S&P 500 Index staged a late-day rally to finish near its high for the session. The gain trimmed its weekly decline to 2 percent. The Dow Jones Industrial Average roared back to all but erase a drop that approached 400 points at its worst.

The threat of a trade war sparked the early selling, only to ease as the president’s recent history of backing off seemingly ironclad policy positions gave rise to speculation the actual levies may not disrupt global growth.

“People always forget that Trump is a negotiator, and when you negotiate, you don’t negotiate from the point where you want it to end up --- you put an anchor out, and you negotiate from that anchor,” said Brent Schutte, chief investment strategist of Northwestern Mutual Life Insurance Co.’s wealthmanagement unit “Yesterday was an anchor. I do believe there will be some give back if others are willing to give the U.S. something.”

Earlier, Trump pushed back against a wave of criticism of the steel and aluminum tariffs he proposed Thursday, saying “trade wars are good.” The possibility of the levies raised the prospect of tit-for-tat curbs on American exports and higher prices for domestic users, further clouding the outlook for economic growth at a time when central banks around the world are embarking on policytightening or approaching it.

“When people are nervous, they’re more likely to react and overreact more strongly,” said James Norman, head of equity strategy at QS Investors. “And that’s the kind of market environment we’re in right now.”