While still underperforming the MSCI's all-country index for the year so far, and lagging euro zone stocks by some 20% in dollar terms in 2025, the S&P500 has all but completed a remarkable 20% round trip from the peak of February to the troughs of April and back.
The VIX 'fear index' ebbed to its lowest in four months, while gold prices slipped to their lowest in almost a month.
With more than 40% of S&P500 revenues coming from overseas, the dollar's slide to 3-year lows this week spotlights a 10%-plus currency tailwind in 2025. The greenback remained near the year's lows on Friday.
And even though President Donald Trump's harrying of Federal Reserve Chair Jerome Powell unnerves many about the long-term inflation impact of threatening Fed independence, it has stepped up bets about a resumption of interest rate cuts - and most clearly after Powell's term ends next year.
While markets awaited the latest U.S. May inflation update later on Friday - with oil prices brushing off the latest Middle East conflict to resume a near 20% year-on-year drop - two and 10-year Treasury yields fell to their lowest since early May on Thursday.
The bond market has been soothed in part by this week's Fed proposal on overhauling how much capital large global banks must hold against relatively low-risk assets, part of a bid to boost banks' participation in Treasury markets.
But markets got a further lift overnight from signs of some movement on bilateral trade negotiations ahead of July 9's expiry of the 90-day pause on Trump's sweeping tariff hikes.
The White House said the United States reached an agreement with China on how to expedite rare earth shipments to the U.S.
European Union leaders discussed new proposals from the United States on a trade deal at a summit in Brussels late on Thursday, with Commission President Ursula von der Leyen saying "all options remain on the table".
German Chancellor Friedrich Merz urged the EU to do a "quick and simple" trade deal rather than a "slow and complicated" one, even as French President Emmanuel Macron struck a cautious note.
And while the U.S. fiscal bill is still struggling through the Senate, there was an important development on tax provisions that may ease foreign investor concerns.
Treasury Secretary Scott Bessent asked Republicans in Congress to remove a "retaliatory tax" proposal - the controversial Section 899 that targets foreign investors with higher tax in retaliation for any overseas disputes.
Justifying the removal, Bessent said that under a G7 agreement, a 15% global corporate minimum tax will not apply to U.S. companies under "Pillar 2" of the Organization for Economic Cooperation and Development tax deal.
The latest economic numbers, meantime, were a mixed bag but show few signs of a sharp downturn yet.
Durable goods orders boomed in May well above forecasts, while the labor market remained resilient with a drop in weekly jobless claims. May trade data, on the other hand, showed a sharp drop in exports.
As the second-quarter earnings season comes into view next month, the longer-term AI investment theme was given a fresh spur from an above-forecast revenue readout from Micron Technology - even though its stock ended lower on Thursday. AI darling Nvidia hit a new record high, however, up more than 80% from the lows of April.
In other corporate news, Nike's shares jumped 10% overnight as its first-quarter revenue outlook exceeded market expectations.
Elsewhere, stocks in Europe were sharply higher on Friday - chiming with Wall Street. They have been boosted by the defense spending push at this week's NATO summit and as details of Germany's big fiscal stimulus unfolded.
German lawmakers on Thursday passed a multi-billion-euro package of fiscal relief measures to support companies and boost investment, involving corporate tax breaks amounting to almost 46 billion euros ($54 billion) from this year through to 2029.
Despite the positive noises on a U.S. trade deal, Chinese stocks bucked the global trend and were in the red on Friday.
China's industrial profits swung back into sharp decline, falling 9.1% in May from a year earlier, as factory activity slowed in the face of broader economic stress.
There was better news in Japan as core consumer inflation in Tokyo slowed sharply in June. Tech stocks led the Nikkei up more than 1%.
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