The U.S. stock market closed on Friday, February 14, with mixed performance across major indexes, yet still ended the week with gains as investors digested global trade developments and inflation data. Crude oil prices fell amid potential peace talks between Russia and Ukraine, but remained higher for the week as President Donald Trump’s new tariffs had not yet been implemented.
At the closing bell:
- Dow Jones dropped 165.35 points (-0.37%) to 44,546.08.
- S&P 500 slipped 0.01% to 6,114.63.
- Nasdaq gained 0.41% to 20,026.77.
Investor Sentiment Resilient Amid Tariff Announcements
Despite Trump’s announcement of a 25% tariff on all steel and aluminum imports, followed by plans for reciprocal tariffs on countries taxing U.S. goods, investors remained optimistic. This is largely because the tariffs were announced but not immediately implemented—steel and aluminum tariffs take effect on March 12, while reciprocal tariffs await an investigation outcome on April 1.
Inflation data released this week also played a key role in market movements:
- The Consumer Price Index (CPI) and Producer Price Index (PPI) both came in hotter than expected, reducing the likelihood of a Federal Reserve interest rate cut in 2025.
- However, analysts believe that based on these figures, the Personal Consumption Expenditures (PCE) index—the Fed’s preferred inflation measure—may not rise as sharply as previously feared in January.
Powell Stands Firm on Interest Rates
During his Congressional testimony on monetary policy this week, Fed Chair Jerome Powell reaffirmed that the central bank is not in a hurry to cut rates. This initially unsettled investors, but fears quickly subsided as the market processed the broader economic outlook.
On Friday, U.S. retail sales data for January showed a 0.9% decline, a sharper drop than economists had forecast in a Dow Jones survey. However, this data did not significantly impact market sentiment.
For the week:
- S&P 500 gained 1.5%.
- Dow Jones rose 0.6%.
- Nasdaq surged 2.6%.
Much of the week’s gains occurred on Thursday, after Trump signed a memorandum outlining his reciprocal tariff plan rather than imposing immediate tariffs.
“It seems that neither the economy nor inflation is overheating, which puts downward pressure on interest rates,” said Matt Stucky, portfolio manager at Northwestern Mutual Wealth Management Company. He attributed this week’s stock market gains partly to falling Treasury yields.
The 10-year U.S. Treasury yield dropped nearly 5 basis points to 4.478% by Friday’s close, down from over 4.5% a week ago.
Oil Prices Drop Amid Peace Talks, But Weekly Gains Hold
In energy markets:
- Brent crude futures fell $0.28 per barrel (-0.37%) to $74.74.
- WTI crude futures dropped $0.55 per barrel (-0.77%) to $70.74.
- For the week, both Brent and WTI crude rose about 1%.
Oil prices declined on Friday after Trump directed U.S. officials to begin peace negotiations for ending the Russia-Ukraine war. This followed phone calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy, during which both leaders expressed interest in peace.
A potential end to the war could ease supply disruptions, and if Western sanctions on Russia are lifted, global oil supply could rise significantly.
However, oil prices remained supported by:
- Delayed U.S. tariffs, which fueled risk appetite and boosted trade optimism.
- U.S. economic pressure on Iran, as Treasury Secretary Scott Bessent reiterated on Friday that the administration aims to maximize economic pressure on Tehran.
- Rising global oil demand, with a JPMorgan Chase report estimating that global oil consumption surged to 103.4 million barrels per day last week, up 1.4 million barrels per day from the same period last year.
“Demand for travel and heating rebounded in the second week of February, following a sluggish period,” the JPMorgan report stated. “This suggests that the gap between actual demand and forecasted demand may narrow soon.”
