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U.S. stocks ended a volatile trading day on a high note on Friday. The S&P 500 rose 1.6%, the Dow Jones Industrial Average climbed 1.3%, while the Nasdaq Composite gained 1.5%, rebounding from a NVIDIA-led NVDA sell-off on Thursday.
Overall, Wall Street had a losing February in 2025 due to the ongoing geopolitical tensions and looming tariff threats from President Donald Trump, as well as tensions in the tech world due to the rise of Chinese AI startup DeepSeek.The Nasdaq shed nearly 5% in February, while the S&P 500 and Dow both fell around 2%, reflecting investor uncertainty over Trump's planned tariffs that are set to take effect this week.
Key Highlights of February
Investors had to contend with escalating trade tensions after China vowed to retaliate against Trump’s latest tariff moves. The President announced an additional 10% tariff on Chinese imports set to take effect Tuesday and pledged to impose new duties on Mexico, Canada and the European Union. The prospect of an intensifying trade war added to investor anxiety.
Adding to the trade turbulence, an economic agreement between the United States and Ukraine remained unresolved after a heated exchange in the Oval Office between President Trump and Ukrainian President Volodymyr Zelensky. The shouting match left negotiations in limbo, further clouding the geopolitical outlook as markets braced for more uncertainty.
Meanwhile, economic data offered mixed signals. The Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, cooled to 2.6%, aligning with expectations and easing concerns about inflation. However, consumer spending fell 0.2% in January, missing forecasts of a 0.1% increase and contrasting with December’s 0.8% rise, raising concerns about slowing economic momentum.
Meanwhile, the University of Michigan’s consumer sentiment index fell to 64.7 in February — a nearly 10% decline — as consumers voiced inflation concerns, particularly due to the likely new tariffs. The five-year inflation outlook climbed to 3.5%, the highest since 1995.U.S. existing home sales dropped more than expected to 4.08 million units in January (read: Time for Defensive Sector ETFs?)
Meanwhile, the cryptocurrency market continued its slump, with Bitcoin plunging 7% to its lowest level since November, marking a 25% drop from its record high amid a broader crypto sell-off. As markets wrapped up a turbulent February, investors remained cautious about the uncertainty surrounding trade policies, geopolitical developments, and economic trends heading into March.