S&P 500 Rises in Final Moments to End a Volatile February:
U.S. stocks overcame another round of volatility driven by geopolitical concerns
and intense confrontations in the White House,
closing February on a high note despite market turbulence.
Contents
Interest Rate Cut Expectations
Market Fluctuations and Stock Recovery
Markets experienced significant swings on Friday.
The U.S.-Ukraine minerals agreement was canceled following
a heated meeting between Donald Trump and Volodymyr Zelensky.
Later, Trump stated that Zelensky could return when he is “ready for peace.”
At the same time, U.S. Treasury Secretary Scott Bessent revealed
that Mexico had proposed aligning its tariffs with those of the U.S.
on China and urged Canada to follow suit, hinting at a potential strategy to avoid additional levies.
Wall Street traders have been facing increasing market volatility
amid risks associated with an economic slowdown, geopolitical tensions,
trade disputes, and high valuations.
David Lefkowitz of UBS Global Wealth Management stated:
“We believe the bull market remains intact,
but we have warned that volatility is expected to rise this year.
That’s why we emphasize the importance of short-term hedging.”
Jay Hatfield of Infrastructure Capital Advisors pointed
out that while U.S.-Ukraine tensions rattled the market,
Trump’s apparent push for peace could be a positive signal.
Meanwhile, Matt Maley of Miller Tabak + Co.
noted that conflicting White House statements make it difficult for investors to make confident decisions.
Adam Phillips of EP Wealth Advisors commented:
“This is a fragile market. We expect further volatility
as investors wait for clarity on an expanding and growing list of issues.”
By the end of Friday’s session, the S&P 500 rose 1.6%,
trimming its February losses. U.S. Treasury yields continued their decline,
with two-year yields dropping below 4%.
Meanwhile, the U.S. dollar index rose by 0.3% but ended the month lower for the second consecutive time.
Tariff Developments in Focus
Investors closely monitored tariff-related headlines,
particularly discussions surrounding trade policies.
On Bloomberg Television, Treasury Secretary Scott Bessent stated:
“Mexico’s proposal to align its tariffs with the U.S. on China is an interesting and potentially effective strategy.”
He added that Canada could also benefit from a similar approach,
describing it as a step toward creating a ‘Fortress North America’ to counter the influx of Chinese imports.
A 22V Research survey indicated no clear consensus on whether tariffs
on Mexico and Canada would take effect next week, with the median estimate at 50% probability.
Dennis DeBusschere, founder of 22V Research, wrote:
“Overall, there is no agreement among investors.”
Rate Cut Expectations Support Wall Street
After economic data showed inflation slowing down, markets found some relief,
shifting investor focus toward the possibility of Federal Reserve rate cuts rather than concerns about weak consumer spending.
The Core Personal Consumption Expenditures (PCE) Price Index,
which excludes food and energy, rose 0.3% in January from the previous month and 2.6% year-over-year,
marking the smallest annual increase since early 2021.
However, inflation-adjusted consumer spending fell 0.5%, the largest monthly decline in almost four years.
Robert Ruggirello of Brave Eagle Wealth Management stated:
“While additional rate cuts may still be months away,
this report keeps the possibility of one or two cuts in 2025 on the table.”
David Russell of TradeStation described the inflation report
as “somewhat reassuring” regarding consumer price data.
Chris Zaccarelli of Northlight Asset Management remains highly cautious about the market,
citing high valuations, policy uncertainty,
and the widespread belief that recession risks are minimal or nonexistent.
Key Market Moves
Indices Performance
The stock market closed higher, with major indices posting notable gains.
The S&P 500 Rises 1.6%, matching the Nasdaq 100,
while the Dow Jones Industrial Average gained 1.4%.
Global markets also saw an uptick, with the MSCI World Index advancing 1%.
Meanwhile, the Bloomberg Magnificent 7 Total Return Index jumped 2%,
reflecting strong performance among top technology giants.
Additionally, the Russell 2000 Index, which tracks small-cap stocks,
rose 1.1%, signaling broader market strength.
Currencies
The currency market experienced moderate movements,
with the Bloomberg Dollar Index rising 0.3%, reflecting a slight strengthening of the U.S. dollar.
Meanwhile, the euro declined 0.2% to $1.0373,
and the British pound fell 0.2% to $1.2579.
The Japanese yen weakened further, dropping 0.5% to 150.52 per dollar,
indicating continued pressure on the currency against the U.S. dollar.
Cryptocurrencies
The crypto market slightly declined, with Bitcoin dropping 0.2% to $84,138.87.
Meanwhile, Ethereum posted larger losses, falling 2.9% to $2,214.34,
reflecting selling pressure on major digital assets.
Commodities
The commodities market also saw declines,
with West Texas Intermediate (WTI) crude oil dropping 0.4% to $70.06 per barrel,
impacted by supply and demand fluctuations in the oil markets.
At the same time, spot gold declined 0.8% to $2,854.71 per ounce,
reflecting selling pressure in the precious metals market.
S&P 500 Rises in Final Moments to End a Volatile February