New warnings about recession risk
Wall Street rallies after a tariff pause, but warnings remain: major banks and the IMF signal recession risks and global tensions. What does it mean for your investments?
The economy is sending mixed signals, and analysts are divided between optimism and uncertainty.
A partial pause in tariffs announced by the United States gave markets a breather, fueling historic gains on Wall Street. However, major banks and international organizations warn that structural risks remain. Last week reflected a volatile environment, where short-term euphoria coexists with deeper concerns.
Weekly Summary
Wall Street closes with historic gains after the temporary tariff pause.
The S&P 500 and Nasdaq rose over 8%, led by tech stocks.
JPMorgan, Wells Fargo, and BlackRock warn of a possible U.S. recession.
The IMF describes the geopolitical climate as a “significant risk.”
Europe ends the week in the red due to side effects from trade tensions.
Reaction in U.S. Markets
President Trump’s announcement of a 90-day pause on new tariffs for most countries (except China) sparked one of the strongest stock market rallies since 2020. The Nasdaq jumped 12%, the S&P 500 climbed 9.4%, and the Dow Jones gained 8.1%. Tech companies led the surge, with Apple, Nvidia, and Microsoft among the top performers.
The rally was seen as a sign that the administration’s trade strategy might soften. Still, several analysts caution that the reaction could be short-lived without deeper structural changes.
Banks Raise Concerns
While markets celebrated, banks like JPMorgan, Wells Fargo, and BlackRock reported their quarterly results with clear warnings: trade volatility, tighter financial conditions, and a potential drop in consumer spending could push the U.S. economy into a recession by late 2025.
All three pointed to weakened business confidence and the likelihood that protectionist measures could have amplified effects in the coming quarters.
Global Perspective
The International Monetary Fund labeled the current geopolitical environment as a "significant risk to global growth." Its managing director, Kristalina Georgieva, called for multilateral dialogue and warned that a prolonged trade war could stall investment and job creation on a global scale.
Meanwhile, European markets did not share Wall Street’s optimism: Spain’s IBEX 35 dropped 0.18% and posted a weekly loss of 1%. Other European indexes also closed in the red, reflecting the indirect impact of U.S. trade actions on exports and supply chains.
Final Analysis
This week’s stock market rally shows how sensitive investors are to any sign of relief. However, warnings from key players shouldn’t be overlooked. For investors, it’s essential to stay calm, avoid impulsive decisions, and reinforce diversification in the face of ongoing political and economic uncertainty.
Sources: El País, BiobioChile, HuffPost, Cadena SER, IMF, CNBC.
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