By Paul J. Davies and Corrie Driebusch

U.S. stocks bounced higher Friday, a day after investors pulled money out of riskier companies such as technology firms in favor of safe-haven assets such as U.S. government bonds.

The recovery Friday illustrated that even as investors have grown more wary about the effects of the U.S.-China trade standoff on the U.S. and other economies, they remain cautiously optimistic about the future of corporate profits.

On Friday, the Dow Jones Industrial Average rose 165 points, or 0.7%, while the S&P 500 added 0.7% and the Nasdaq Composite gained 0.8%.

All three indexes are on pace for weekly declines -- as well as steep monthly losses -- amid escalating bluster between the U.S. and China, higher tariffs and uncertain economic damage. On Thursday, the Dow industrials lost nearly 300 points, the same day the Federal Reserve Bank of New York warned that tariffs imposed on Chinese imports were costing the average household $813 each a year. The blue-chip index is on pace to notch its fifth consecutive weekly loss, which would mark its longest such losing stretch since 2011.

The U.S. economy is among the least dependent on international trade in the world, according to Mark Haefele, chief investment officer in UBS's Global Wealth Management division, and the White House is confident that any economic damage to the economy will be limited.

"When it serves his interest, President Trump takes tariffs off as quickly as he puts them on, so things can change quickly," Mr. Haefele said." But we don't see the U.S. or China hurrying to reach a deal, and the risk of miscalculation is growing."

Worries about the economic impact hit oil prices hard Thursday, with Brent crude prices dropping more than 4.5% for their biggest one-day fall since Christmas eve 2018. Brent partly recovered Friday morning, rising nearly 1% to $68.58.

Government bond prices slipped and yields rose slightly Friday, rowing back on the trend of investors' growing preference for safety that has pushed yields generally lower all year. U.S. 10-year Treasury yields were back up to 2.316% from 2.296% on Thursday, which was their lowest level since October 2017.

In Europe, the British pound rose after a week of declines as U.K. Prime Minister Theresa May announced Friday she would resign in two weeks to allow a new leader to try to break log-jammed efforts to agree to a way to leave the European Union.

The Stoxx Europe 600 rose 0.9%, with Germany's DAX up 0.9%, partially recovering from a near 2% drop Thursday when it was weighed down in part by Deutsche Bank, which slipped 2.4% to close at an all-time low.

Hong Kong's Hang Seng was up 0.3% and China's Shanghai A-shares were flat, while the Nikkei 225 slipped 0.2%.

Write to Paul J. Davies at paul.davies@wsj.com and Corrie Driebusch at corrie.driebusch@wsj.com

(END) Dow Jones Newswires

May 24, 2019 10:14 ET (14:14 GMT)

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