Daily Market Recap – Friday Feb 28, 2025

Stocks Rebound to Close a Volatile Week

U.S. equities ended Friday higher, with the S&P 500 (+1.58%) and Nasdaq (+1.63%) recovering from Thursday’s steep selloff, though both indices still posted their worst weekly performance since September. The Dow (+1.39%) and Russell 2000 (+1.09%) also gained, as a late-session rally helped erase some of the week’s losses. Big Tech rebounded after a sharp drawdown, with semiconductors, banks, credit cards, autos, and travel-related names leading the charge. Meanwhile, underperformers included China tech, department stores, software, and hospitals. Treasuries firmed across the curve, extending this week’s notable yield declines. The dollar gained 0.3%, gold fell 1.6%, and crude slipped 0.8%, while Bitcoin rebounded 0.4% after dipping below $80K earlier in the session.

Economic Data & Policy Developments

January’s core PCE inflation print came in at 0.3% month-over-month, in line with expectations and marking the lowest annual core reading since June, offering some relief on the inflation front. However, personal spending unexpectedly contracted, signaling potential consumer caution, particularly following last week’s weaker consumer confidence data and Walmart’s soft guidance. February’s Chicago PMI beat expectations, though the Atlanta Fed’s GDPNow model took a sharp downward turn, now projecting Q1 GDP at -1.5%, a steep drop from the previous +2.3% estimate.

In Washington, geopolitical tensions took center stage as President Trump clashed with Ukraine’s President Zelensky, leaving a planned minerals deal unsigned and casting further uncertainty over U.S. foreign policy. Meanwhile, Trump reaffirmed that new tariffs on Canada and Mexico will take effect on March 4, with an additional 10% tariff on Chinese imports set to roll out the same day. Markets remain cautious about the broader economic impact of these trade policies, even as many investors see them as part of a broader negotiation strategy.

Notable Earnings & Sector Movers

Earnings continued to drive stock-specific moves. Elastic (ESTC) soared 14.9% on strong earnings and upbeat guidance tied to AI-driven demand, while Archer Aviation (ACHR) jumped 12.1% after highlighting expansion plans. AES Corp (AES) gained 11.7% after strong earnings and bullish growth projections in renewables. On the downside, DoubleVerify (DV) plunged 36% on weaker-than-expected results and soft 2025 guidance, while NetApp (NTAP) fell 15.6% after disappointing revenue and execution concerns. Dell (DELL) and HP (HPQ) both struggled post-earnings, with muted PC demand and tariff-related headwinds weighing on sentiment.

Here’s Our Take:

Despite Friday’s rebound, this week’s selloff highlighted growing market jitters around trade uncertainty, inflation stickiness, and stretched valuations in high-growth sectors. While AI tailwinds remain a long-term driver, Nvidia’s earnings showed that expectations are high, and any signs of slowing growth or margin pressure can trigger sharp pullbacks. Meanwhile, the sharp decline in the Atlanta Fed’s GDPNow forecast and weaker consumer data signal potential economic softness ahead. We think investors should stay cautious amid geopolitical tensions and upcoming tariff implementations, while watching key economic data next week, including ISM manufacturing/services and the February jobs report, for further signals on the macroeconomic outlook.