Stocks rebounded sharply on Friday, closing out a turbulent week and a losing month on a positive note as investors brushed aside heightened geopolitical tensions. The S&P 500 surged 1.59%, while the Dow climbed 601 points, recovering from early session losses following a heated exchange between President Donald Trump and Ukraine’s Volodymyr Zelenskyy at the White House. The Nasdaq Composite also gained 1.63%, though it remained weighed down by a weak February performance, its worst month since April 2024. Investors faced with mixed economic signals, as a strong personal income report contrasted with a decline in consumer spending and a higher-than-expected core PCE inflation reading. 

Key Takeaways:

  • S&P 500 Rebounds, Trims Weekly Losses: The S&P 500 surged 1.59% on Friday to close at 5,954.50, ending a volatile week on a positive note. Despite the late-session rally, the index declined 1% for the week and finished February down 1.4%, as investors navigated geopolitical tensions and economic uncertainty.
  • Dow Rallies Over 600 Points: The Dow Jones Industrial Average climbed 601.41 points, or 1.39%, to 43,840.91, erasing its losses from earlier in the week. However, the blue-chip index still ended February lower by 1.6%.
  • Tech Sell-Off Weighs on Nasdaq, Worst Month Since April 2024: The Nasdaq Composite climbed 1.63% on Friday to 18,847.28 but posted a 4% decline for February, its worst month in nearly a year. The weakness was driven by a steep 8.5% drop in Nvidia shares earlier in the week, following its earnings report that showed the smallest revenue beat in two years. 
  • Trump-Zelenskyy Clash Sparks Volatility, VIX Hits 22.40: Stocks briefly turned negative after President Donald Trump and Ukraine’s Volodymyr Zelenskyy clashed in the Oval Office over a potential mineral rights deal. Trump’s remark that Zelenskyy was “gambling with World War III” rattled markets, sending the Cboe Volatility Index (VIX) up to 22.40, its highest level since January 27, before easing as equities rebounded.
  • European Markets End Mixed, Outperform US in February: European stocks extended their winning streak, with the Stoxx 600 closing fractionally higher on Friday, securing a tenth straight weekly gain. The index rose more than 3% in February, outperforming Wall Street. The FTSE 100 climbed 1.57% this month to 8,809.74, while France’s CAC 40 inched up 0.1% to 8,112. Germany’s DAX finished flat, and Italy’s FTSE MIB extended its losses, closing below 38,600. European markets showed resilience despite mounting trade tensions after Trump threatened to impose 25% tariffs on EU imports “very soon.” Meanwhile, French inflation eased to 0.8% in February, according to preliminary figures, while data from four major German states suggested a further slowdown in national inflation. In North Rhine-Westphalia, inflation dipped to 1.9% from 2.0% in January, while Baden-Württemberg saw a slight rise to 2.5%. While, German retail sales increased 0.2% between December and January, showing resilience in consumer demand.
  • Asian Markets Sink as Trump Confirms Tariffs on Mexico, Canada, and China: Trump reaffirmed that 25% tariffs on imports from Mexico and Canada will take effect on March 4, with an additional 10% levy on Chinese goods. The news sent Asian markets tumbling on Friday. The Hang Seng Index fell 3.55%, while the CSI 300 in mainland China dropped 1.97% to 3,890.05. Japan’s Nikkei 225 slumped 2.88% to 37,155.50, and the Topix lost 1.98% to 2,682.09. South Korea’s Kospi plunged 3.39% to 2,532.78, and the Kosdaq dropped 3.49% to 743.96. Australia’s S&P/ASX 200 slid 1.16% to 8,172.40, and India’s Nifty 50 fell 0.99%.
  • US Consumer Spending Falls, Inflation Edges Higher: The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, rose 0.3% in January and 2.5% year-over-year. The core PCE index, which excludes food and energy, also climbed 0.3% month-over-month and 2.6% annually, slightly down from December’s 2.9% reading. However, consumer spending unexpectedly declined 0.2% in January, while personal income surged 0.9%, suggesting households are choosing to save rather than spend. The personal savings rate jumped to 4.6%.
  • US Treasury Yields Drop as Investors Seek Safety: Bond prices surged as traders moved into safe-haven assets. The 10-year Treasury yield fell 6 basis points to 4.208%, while the 2-year yield declined 8 basis points to 3.987%. Investors reacted to a combination of geopolitical uncertainty, weak consumer spending data, and persistent inflation, fuelling expectations that the Federal Reserve may hold off on rate cuts longer than anticipated.
  • Oil Prices Slide, First Monthly Decline Since November: Oil markets weakened on Friday as Brent crude dropped 1.16% to $73.18 per barrel, and West Texas Intermediate (WTI) crude fell 0.84% to $69.76 per barrel. The decline came as traders assessed the impact of Trump’s tariff moves, the resumption of Iraqi oil exports from Kurdistan, and OPEC’s upcoming production plans. For the month, oil posted its first loss since November amid concerns over global demand and geopolitical uncertainty.

FX Today:

  • Euro Struggles as Gains Fade, Closing Below 1.0380: The euro weakened against the US dollar on Friday, with EUR/USD slipping 0.24% to settle at 1.0372. The pair started the session at 1.0397 and briefly climbed to 1.0419 before losing momentum, falling to a low of 1.0359. Weaker-than-expected inflation data out of Europe weighed on sentiment, alongside concerns over escalating US trade tensions with the EU. The euro remains below the 50-day SMA at 1.0387, with resistance ahead at 1.0420 and the 100-day SMA at 1.0526. Further losses could see the pair test 1.0350, with a break lower exposing 1.0300.
  • British Pound Drifts Lower as Resistance Holds at 1.2600: Sterling struggled for direction on Friday, with GBP/USD declining 0.17% to 1.2579. After attempting to push higher to 1.2622 early in the session, the pair encountered selling pressure, dipping to a low of 1.2559 before stabilising. Market uncertainty surrounding potential US tariffs weighed on sentiment, though speculation remains that the UK could be spared from the worst of Trump’s trade policies. The pound is facing key resistance at 1.2600, with the 100-day SMA at 1.2637 acting as a major hurdle. On the downside, immediate support is seen at 1.2550, with a break below this level opening the door to 1.2500.
  • Canadian Dollar Slips Despite Strong Economic Data: The Canadian dollar lost ground against the US dollar on Friday, with USD/CAD rising 0.25% to 1.4469. The pair opened at 1.4434 and briefly dipped to 1.4399 before rebounding to a session high of 1.4469. Despite Canada’s stronger-than-expected GDP growth of 2.6% annualised in Q4, the loonie failed to capitalise, as the dollar remained firm. USD/CAD is now testing resistance at 1.4500, with a break higher potentially pushing the pair toward 1.4600. On the downside, support is seen at 1.4400, followed by 1.4300 if downward pressure intensifies.
  • Gold Retreats as Prices Struggle to Hold Above $2,870: Gold prices weakened on Friday, with the metal dropping 0.77% to close at $2,854. After rising to an intraday high of $2,885, gold faced renewed selling pressure, pulling it down to a low of $2,832 before stabilising. Despite the decline, gold remains in an uptrend, with support at $2,850 and further downside risks toward $2,800. Resistance remains at $2,870, with a move above $2,900 needed to regain bullish momentum. Traders continue to monitor global uncertainty and inflation trends for further direction in the precious metals market.

Market Movers:

  • Nvidia Recovers After Recent Sell-Off: Shares of Nvidia climbed 4% on Friday as investors bought the dip following the stock’s steep 8.5% drop on Thursday. The recent sell-off came after the company’s latest earnings report showed its smallest revenue beat in two years, raising concerns over growth momentum in the AI sector.
  • Crypto Stocks Rally as Bitcoin Bounces Back: Bitcoin briefly dropped below $80,000 overnight for the first time in three months but rebounded later in the session, boosting crypto-related stocks. Coinbase gained 3.5%, while MicroStrategy jumped 6.4%. Miner Mara Holdings also surged 6% as investors welcomed relief in digital asset markets.
  • AES Surges on Strong Earnings: Utility company AES jumped 11.7% after posting full-year adjusted earnings of $2.14 per share on revenue of $12.28 billion, exceeding analysts’ expectations of $1.91 per share on $12.13 billion in revenue. 
  • Duolingo Plunges on Weak Guidance: Shares of Duolingo tumbled 17% after the company’s first-quarter EBITDA guidance fell short of analyst expectations. 
  • NetApp Slumps After Revenue Miss: Tech company NetApp slid 15.6% after reporting fiscal third-quarter revenue of $1.64 billion, below the $1.69 billion expected by analysts. 
  • SoundHound AI Jumps on Strong Revenue: Shares of SoundHound AI surged 17.5% after the voice recognition company posted fourth-quarter revenue of $34.5 million, exceeding the $33.7 million expected by analysts. 

As February came to a close, markets ended on a volatile note, with the S&P 500 rallying 1.59% on Friday to trim weekly losses, while the Dow Jones climbed over 600 points. Despite the late-session rebound, the Nasdaq posted its worst month since April 2024, weighed down by tech sector weakness and Nvidia’s sharp decline earlier in the week. Geopolitical tensions added to uncertainty, with markets reacting to President Trump’s heated exchange with Ukraine’s Zelenskyy, which briefly spiked the VIX to 22.40. Meanwhile, Treasury yields fell as investors sought safety, and oil prices declined for the first time since November amid renewed tariff concerns and Iraq’s decision to resume exports. With investors still digesting the latest economic data—including weaker consumer spending, rising PCE inflation, and Canada’s stronger-than-expected GDP growth—focus now turns to the Federal Reserve’s next policy moves and the potential economic fallout from Trump’s escalating trade war.