The U.S. stock market exhibited a mixed performance on Friday as investors digested the latest inflation data, which came in line with expectations but failed to alleviate broader concerns about economic uncertainty, tariff threats, and a tech sector sell-off. The S&P 500 remained nearly flat, while the Nasdaq Composite slipped further, and the Dow Jones Industrial Average managed modest gains. The trading session capped off a turbulent week and month, with major indexes on track for their worst weekly and monthly performances in months.
Inflation Data: A Double-Edged Sword
The Commerce Department’s Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, showed a 0.3% monthly increase and a 2.5% annual rise, matching Dow Jones consensus estimates. Core PCE, which excludes volatile food and energy prices, also rose 0.3% for the month and 2.6% year-over-year. While the data signaled a slight easing of inflationary pressures, it did little to quell investor anxiety about the broader economic landscape.
“The inflation numbers are in line, but they don’t change the narrative,” said Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management. “Investors are still grappling with uncertainty around tariffs, consumer spending, and the tech sector’s recent struggles.”
Tech Sector Woes Deepen
The tech-heavy Nasdaq Composite bore the brunt of the market’s struggles, sliding 0.3% on Friday and down 5.3% for the month. This marks its worst monthly performance since September 2023. The sell-off was fueled by a sharp decline in megacap tech stocks, particularly Nvidia, which extended its losses after a disappointing earnings report.
Nvidia, a bellwether for the artificial intelligence (AI) sector, plunged 8.5% on Thursday after reporting its smallest revenue beat in two years and a decline in gross profit margins. The stock fell another 2.4% on Friday, dragging down the broader tech sector. Other tech giants, including Apple, Microsoft, and Amazon, also faced pressure, with Apple trading below its 50-day moving average and Amazon triggering a sell signal after falling below a key buy point.
“February is historically a volatile month for stocks, and this year is no exception,” Landsberg added. “The tech sector’s struggles are a reflection of broader market uncertainty and a rotation out of growth stocks.”
Dow Outperforms, But Concerns Linger
In contrast to the Nasdaq, the Dow Jones Industrial Average outperformed, rising 205 points, or 0.5%, on Friday. However, the blue-chip index was not immune to the broader market’s challenges, posting a 2.7% decline for the month. Gains in industrials and financials helped offset losses in tech and consumer discretionary stocks.
Goldman Sachs, a Dow component, showed resilience, trading near a flat base buy point of 612.73. Wells Fargo, another financial heavyweight, also held steady, just below a cup base buy point of 78.13. However, the overall sentiment remained cautious as investors weighed the impact of potential tariffs and slowing consumer spending.
Tariff Threats and Global Tensions
Adding to the market’s unease were renewed tariff threats from former President Donald Trump, who vowed to impose an additional 10% tariff on Chinese goods starting March 4. China swiftly responded, with its Ministry of Commerce stating it would “take all necessary countermeasures to defend its legitimate rights and interests.”
The escalating trade tensions weighed heavily on U.S.-listed Chinese stocks. E-commerce giant Alibaba dropped more than 4%, while PDD Holdings and electric vehicle makers Nio and Li Auto each fell nearly 5%. The prospect of higher tariffs also prompted Bank of America to downgrade Logitech International, citing potential impacts on the company’s growth prospects.
“The tariff threat is a wildcard that could disrupt global trade and weigh on corporate earnings,” said Didier Scemama, an analyst at Bank of America. “Investors should brace for increased volatility in the coming weeks.”
Bitcoin’s Brutal Week
The cryptocurrency market also faced significant headwinds, with Bitcoin plummeting to a three-month low of 78,226.23.Theflagshipcryptocurrencyisdownmorethan1478,226.23.Theflagshipcryptocurrencyisdownmorethan142.7 billion in outflows this week, reflecting waning investor confidence.
“Bitcoin’s decline is a reflection of broader risk-off sentiment,” said Tanaya Macheel, a cryptocurrency analyst. “Investors are pulling back from speculative assets amid heightened economic uncertainty.”
Earnings Movers and Shakers
The earnings season continued to drive stock-specific movements. Dell Technologies fell nearly 7% after reporting fourth-quarter revenue of 23.93billion,missinganalysts’estimatesof23.93billion,missinganalysts’estimatesof24.56 billion. Despite beating earnings expectations, the company’s soft guidance weighed on investor sentiment.
On the positive side, Elastic surged 18% after posting better-than-expected fiscal third-quarter results. The data analytics company’s strong performance underscored the resilience of the enterprise software sector. However, Redfin tumbled 12% after reporting a wider-than-expected loss, highlighting ongoing challenges in the real estate market.
Labor Market Concerns
A spike in weekly jobless claims added to the market’s unease. The Labor Department reported that initial claims for the week ended February 22 reached 242,000, up 22,000 from the previous week and exceeding the Dow Jones estimate of 225,000. While some attributed the increase to seasonal factors, JPMorgan warned that the data could signal underlying weakness in the labor market.
“The sharp move higher in jobless claims is somewhat concerning,” said Bennett Parrish, an economist at JPMorgan. “While weather and seasonal noise may have played a role, the trend bears watching.”
Looking Ahead
As February draws to a close, investors are bracing for more volatility in the coming weeks. The S&P 500 is on track for its worst week since September 2024, while the Nasdaq is headed for its worst month since September 2023. The Dow’s more modest losses reflect a rotation into defensive sectors, but the overall sentiment remains cautious.
“The market is at a crossroads,” Landsberg said. “Investors are searching for clarity on inflation, tariffs, and the health of the consumer. Until we get more definitive answers, volatility is likely to persist.”
For now, the stock market’s trajectory remains uncertain, with inflation data, geopolitical tensions, and corporate earnings all playing pivotal roles. As the Federal Reserve’s next meeting approaches, all eyes will be on policymakers for clues about the future of interest rates and the broader economic outlook.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.