A bounce in the S&P 500 on Friday afternoon wasn’t enough to pull the index out of the red for the month.
The stock market lost some of its shine in February, ending lower for the month after the Trump administration’s policy priorities and weak consumer sentiment made investors uneasy about the economy.
Stocks had climbed in the aftermath of President Trump’s election win, as traders geared up for lighter regulation and tax cuts — anticipating they would add up to accelerating growth. But that rally has stalled more recently as anxiety about the inflationary impact of new tariffs began to grow. A slump in technology stocks this week also weighed on the broad market.
The S&P 500 bounced late on Friday, ending a turbulent day with a gain of 1.6 percent, but the gains weren’t enough for the index to avoid a second consecutive week of losses. The index — which had touched a record as recently as Feb. 19 — was down about 1.4 percent for the month.
The pullback was driven, in part, by renewed concerns about the inflationary effects of sweeping tariffs, which Mr. Trump has already imposed on China and has said he will broaden to Canada and Mexico next week. As recently as late 2024, investors had expected the Federal Reserve to cut interest rates several times this year, moves that would be positive for stocks and the economy, but that view has shifted quickly amid concerns that inflation will linger longer than expected. With rates set to remain elevated, worries have extended to the broader impact on the economy.
Recent economic surveys showing a sharp decline in consumer sentiment, in part because of pessimism about employment prospects, as well as expectations that prices could start to climb again, have fueled caution among investors too.
“The market had shown great enthusiasm around the election, and it was predicated on the likelihood of favorable taxation, of a lighter regulatory climate, and just general enthusiasm,” said Steve Sosnick, the chief strategist at Interactive Brokers. “The problem is, those expectations got a bit ahead of the reality.”
Here’s what else to know about the recent retreat: