S&P 500 Receives Late-Day Uplift Amid February's Turbulence

The S&P 500 climbed 1.6% on Friday, helping to reduce its losses for February. Treasuries continued their winning streak this month, with two-year yields falling below 4%.

Overview of Market Trends

Investors on Wall Street have witnessed increased fluctuations in equity markets due to various risks present in the financial landscape, including concerns about economic slowdowns, geopolitical tensions, trade disputes, and elevated valuations.

In the last trading session of February, U.S. stocks rebounded from a wave of volatility triggered by geopolitical issues and a contentious interaction at the White House. A planned minerals agreement between the U.S. and Ukraine fell through after a heated discussion between Donald Trump and Ukrainian President Volodymyr Zelenskiy.

During this exchange, Trump remarked that Zelenskiy could return when he was prepared to pursue peace. Meanwhile, U.S. Treasury Secretary Scott Bessent mentioned that Mexico has put forward a proposal to align its tariffs on China with those of the U.S., suggesting that Canada may follow suit, which could potentially help ease some tariff-related tensions.

Market Sentiments and Predictions

Traders have been navigating a climate of increased volatility amid uncertainties surrounding the economy and policy shifts. David Lefkowitz from UBS Global Wealth Management stated that while the bull market remains intact, he anticipates a greater level of volatility this year, indicating the importance of potential short-term hedges.

Jay Hatfield of Infrastructure Capital Advisors observed that although the U.S.-Ukraine situation created market jitters, the implication is that Trump could eventually drive towards peace, which is a positive outlook. Matt Maley from Miller Tabak + Co. commented on the challenges investors face due to mixed messages emerging from the White House, which complicates confidence in short-term market forecasts.

Adam Phillips from EP Wealth Advisors described the current market as fragile, bracing for more volatility as investors await further clarity on the array of unfolding issues.

Friday's rally saw the S&P 500 finishing the day up 1.6%, mitigating some of its losses throughout February. The dollar index gained 0.3% on the last trading day of the week but still recorded a drop for two consecutive months.

Economic Indicators

Traders closely monitored multiple headlines, especially regarding tariffs. Treasury Secretary Bessent noted on Bloomberg Television that Mexico's proposal to match the U.S. tariffs on China is intriguing and could create a united North American front against an influx of imports.

A recent survey by 22V Research revealed a lack of consensus on the likelihood of tariffs from Mexico and Canada taking effect, with responses ranging across a flat distribution.

Markets appeared to find some relief from a recent report indicating inflation is not accelerating as feared. Investors shifted their focus away from a concerning drop in consumer spending toward the potential for the Federal Reserve to contemplate interest rate cuts. The January core personal consumption expenditures (PCE) price index, which excludes food and energy, rose 0.3% from December, recording a year-over-year increase of 2.6%, the smallest since early 2021.

Robert Ruggirello of Brave Eagle Wealth Management remarked that while significant rate cuts may still be several months away, the latest report retains options for potential reductions in 2025. David Russell of TradeStation suggested that the PCE report offers some reassurance despite apprehensions regarding previous consumer pricing data.

Chris Zaccarelli from Northlight Asset Management expressed cautious sentiment about the market, given the high valuations and uncertain policy landscape companies are navigating, alongside a collective belief that the risk of recession is very low.

Corporate Highlights

• Microsoft Corp. is signaling the conclusion of its involvement with Skype, the well-known internet calling and messaging platform acquired nearly 14 years ago.

• Bath & Body Works Inc., a popular personal care retailer, received an upgrade from Citigroup Inc. following its solid financial performance.

• Redfin Corp., an online real estate service, reported disappointing fourth-quarter results, leading analysts to lower their outlook.

• Rocket Lab USA Inc. postponed the launch of its Neutron rocket to the latter half of the year and provided revenue forecasts that failed to meet expectations, prompting analysts to reevaluate price targets.

Market Performance Summary

Some key changes in the markets include:

Stock Performance

• The S&P 500 increased by 1.6% as of 4 p.m. New York time.

• The Nasdaq 100 gained 1.6%.

• The Dow Jones Industrial Average rose 1.4%.

• The MSCI World Index was up by 1%.

• The Bloomberg Magnificent 7 Total Return Index climbed 2%.

• The Russell 2000 Index increased by 1.1%.

Currency Movements

• The Bloomberg Dollar Spot Index rose by 0.3%.

• The euro dipped 0.2% to $1.0373.

• The British pound declined by 0.2% to $1.2579.

• The Japanese yen fell by 0.5% to 150.52 per dollar.

Cryptocurrency Market

• Bitcoin decreased by 0.2% to $84,138.87.

• Ether fell 2.9% to $2,214.34.

Bond Market Trends

• The yield on 10-year Treasuries fell five basis points to 4.21%.

• Germany’s 10-year yield remained stable at 2.41%.

• Britain’s 10-year yield decreased by three basis points to 4.48%.

Commodities Overview

• West Texas Intermediate crude oil fell 0.4% to $70.06 per barrel.

• Spot gold dropped 0.8% to $2,854.71 per ounce.

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