US stock market rises significantly, with the Dow Jones Industrial Average surging by 585 points, largely recovering losses from previous Friday's steep sell-off.
In a week marked by economic uncertainties and the ongoing impact of tariffs, global stock markets have shown a mixed performance. The U.S. stock market, which experienced its worst week since May, has seen a rally on Monday following its sharp loss.
Elsewhere, European and Asian markets have generally shown positive trends, with South Korea's Kospi rising 0.9% and France's CAC 40 climbing 1.1%. However, Japan's Nikkei 225 bucked the trend, dropping 1.2%.
The economic effects of tariffs, particularly those enacted in 2025, have had a significant impact on the U.S. economy. According to recent studies, these tariffs are estimated to reduce U.S. real GDP growth by 0.9 percentage points in 2025, leaving the economy about 0.5% smaller in the long run. This equates to an annual loss of about $135 billion in 2024-dollar terms.
The tariffs have also increased consumer goods prices, especially in clothing and textiles, and fueled inflation pressures. Unemployment has increased, with payroll employment dropping by approximately 641,000 jobs by the end of 2025.
Sectoral impacts have been uneven, with U.S. manufacturing output rising by 2.6%, while other sectors such as construction and agriculture have contracted. Automotive and manufacturing costs have also risen significantly due to tariffs on steel, aluminum, and auto parts.
The economic drag, increased uncertainty, inflation pressures, and sectoral disruptions driven by tariffs typically result in increased market volatility and weigh on stock performance. Heightened trade policy uncertainty has been noted by economists as a factor dampening investment and capital spending.
Meanwhile, in corporate news, Tesla CEO Elon Musk was awarded 96 million shares of restricted stock valued at approximately $29 billion. Idexx Laboratories soared 27.5% after reporting a stronger profit for the spring than analysts expected and raising its forecast for profit over the full year. Wayfair climbed 12.7% after reporting accelerating growth that helped it make more in profit and revenue during the spring than analysts expected.
In other corporate developments, Berkshire Hathaway reported a drop in profit for its latest quarter from a year earlier, due in part to the falling value of its investment in Kraft Heinz. CommScope soared 86.3% after reaching a deal to sell its connectivity and cable business to Amphenol for $10.5 billion in cash.
On Semiconductor saw a 15.6% loss in the latest quarter, but the company stated it's beginning to see "signs of stabilization" across its customers. Tyson Foods delivered a bigger-than-expected profit for the latest quarter, causing the company behind the Jimmy Dean and Hillshire Farms brands to rise 2.4%.
In a move that could potentially stimulate the economy, President Trump has continued his criticism of the Federal Reserve, suggesting lower interest rates. However, the unemployment rate worsened to 4.2% last month, as job growth slowed sharply.
President Donald Trump also fired the person in charge of compiling the jobs numbers, adding to the uncertainty surrounding the economic outlook.
The S&P 500, Dow Jones Industrial Average, and Nasdaq composite have shown signs of recovery, with the S&P 500 rising 1.5%, the Dow Jones Industrial Average climbing 585 points, and the Nasdaq composite leaping 2%.
References:
[1] Ott, M., & Kurtenbach, E. (2025). Tariffs' Impact on U.S. Economy and Stock Market. Associated Press.
[2] J.P. Morgan (2025). GDP Forecast Lowered Due to Tariffs and Trade Measures. J.P. Morgan Research.
[3] U.S. Bureau of Labor Statistics (2025). Employment Situation Summary. U.S. Department of Labor.
[4] Federal Reserve (2025). Monetary Policy Report. Federal Reserve.
[5] National Association of Manufacturers (2025). Tariffs and the U.S. Auto Industry. National Association of Manufacturers.
- Despite the ongoing impact of tariffs on the U.S. economy, some investors are keeping a close eye on the stock market, hoping for an upward trend to offset the economic uncertainties.
- The economic effects of tariffs have had significant implications for business, with sectors such as manufacturing and automotive experiencing significant costs and ore volatility in the stock-market.
