Wall Street closed higher on Friday, driven by consumer and financial stocks. Banking stocks steadied after the recent turmoil, and investors welcomed remarks by Donald Trump softening the stance on high tariffs with China.All three benchmark indexes finished in the green.

How Did the Benchmarks Perform?

The Dow Jones Industrial Average (DJI) climbed 0.5%, or 238.37 points, to close at 46,190.61. Twenty-two components of the 30-stock index ended in positive territory, while eight ended in negative.

The tech-heavy Nasdaq Composite added 117.44 points, or 0.5%, to close at 22,679.98.

The S&P 500 gained 34.94 points, or 0.5%, to close at 6,664.01. Eight of the 11 broad sectors of the benchmark index closed in the green. The Consumer Staples Select Sector SPDR (XLP), the Consumer Discretionary Select Sector SPDR (XLY) and the Financials Select Sector SPDR (XLF) advanced 1.3%, 0.9% and 0.8%, respectively, while the Energy Select Sector SPDR (XLE) fell 0.5%.

The fear gauge CBOE Volatility Index (VIX) decreased 17.9% to 20.78. A total of 19.6 billion shares were traded on Friday, lower than the last 20-session average of 20.7 billion. Advancers outnumbered decliners by a 2.6-to-1 ratio on the S&P 500.

Banking Sector Rebounds on Wall Street

Banking stocks staged a rebound on Friday after the prior session’s slump that was driven by fresh worries over loan quality and private-credit exposure. The bounce came as investors digested reassuring signals that the situation might be more isolated than systemic, helping to calm earlier panic. The partial recovery boosted broader market sentiment and eased pressure on the financial industry, providing relief after a rough prior session and supporting the view that the sector’s risks may be contained rather than widespread.

Trump’s Softened China Tariff Tone Boosts Market Confidence

On Friday, U.S. markets responded positively when Donald Trump indicated that his previously announced plan to impose 100% tariffs on imports from China was “not sustainable”, signaling a possible de-escalation in trade tensions. Markets were recently rattled by fears of a full-blown trade war, especially after China tightened rare-earth export controls and the administration threatened massive new levies.

The remark that a blanket tariff increase would be impractical reassured investors that the disruption to global supply chains and inflationary pressures might ease. As a result, broad market indices ticked higher, investor sentiment improved and the volatility index fell sharply, suggesting risk aversion was retreating. While most sectors drew support from the thawing trade-war fears, companies sensitive to consumer demand particularly gained ground, as lower costs and improved sentiment raised expectations for spending and profitability.

Consequently, shares of The Estee Lauder Companies Inc. (EL Quick QuoteEL - Free Report) and Dollar Tree, Inc. (DLTR Quick QuoteDLTR - Free Report) jumped 4.1% and 2.6%, respectively. While EL currently carries a Zacks Rank #3 (Hold), DLTR has a #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Weekly Roundup

For the week ended Oct. 17, the tech-heavy Nasdaq, the S&P 500 and the Dow Jones gained 2.1%, 1.7% and 1.6%, respectively. Wall Street advanced as easing trade tensions and softer rhetoric on China tariffs from Washington lifted investor confidence. Signs of stabilizing inflation and resilient consumer demand added to the upbeat mood, while optimism grew that global supply pressures might ease. The combination of improved risk appetite and expectations of steadier economic growth drove a broad rally across major indexes.

Economic Data

No economic data was released on Friday.