Stocks rebound as hopes rise that trade tensions will ease

Wall Street capped a turbulent week with a lateday rally Friday after shaking off an early slump triggered by the latest escalation in the trade war between the U.S. and China.

The market fell sharply in the early going after the U.S. raised tariffs on $200 billion worth of Chinese goods when negotiators failed to reach a deal. Hours later, remarks from President Donald Trump and Treasury Secretary Steven Mnuchin gave investors reason for optimism.

First, Mnuchin told CNBC that the trade talks had been “constructive,” which spurred the market’s rebound. Then, in a lateafternoon tweet, Trump suggested the tariffs could be removed and that the trade talks “will continue.”

The afternoon pickup led to a broad reversal in the market, leaving only health care stocks with a loss. Still, the buying did little to blunt the overall sharp decline for stocks this week. The benchmark S&P 500 index finished with its worst weekly loss of the year, 2.2 percent.

“Nobody wants to sell too aggressively just in case things get settled and the market rallies,” said J.J. Kinahan, chief market strategist for TD Ameritrade. “As long as they’re still talking there’s a chance that this gets done.”

The S&P 500 index rose

10.68 points, or 0.4 percent, to 2,881.40. The broad index, which earlier had been down 1.6 percent, has given back much of the gains it made in April. It’s still up

14.9 percent for the year. The Dow Jones Industrial Average gained 114.01 points, or 0.4 percent, to

25,942.37. It was down as much as 358 earlier. The Nasdaq added 6.35 points, or 0.1 percent, to 7,916.94. The technology heavy index rebounded after having been down as much as 1.9 percent earlier.

The Russell 2000 index of small company stocks also closed higher after being down much of the day. It picked up 2.94 points, or 0.2 percent, to 1,572.99. Major indexes in Europe closed mostly higher.