NEW YORK (AP) — U.S. stocks rallied on Friday to close out their dreary February on a brighter note.
The S&P 500 jumped 1.6% to trim its loss for the month, enough to make it the worst only since December instead of since April. It had dropped in five of the prior six days after weaker-than-expected reports on the economy and worries about President Donald Trump’s tariffs knocked the index off its all-time high set last week.
The Dow Jones Industrial Average rose 601 points, or 1.4%, and the Nasdaq composite climbed 1.6%.
Much of the recent damage had focused on the market’s biggest winners of recent years, whose momentum had seemed nearly impossible to stop at times. Stocks that flew in the frenzy around artificial-intelligence technology slumped sharply, for example. Bitcoin, meanwhile, dropped more than 20% from its record.
Many of those beaten-down areas of the market jumped Friday to recover some of their losses. Nvidia, which has become one of the market’s most influential stocks, rose 4% following its 8.5% tumble Thursday and was the strongest force lifting the S&P 500. Bitcoin bounced back above $84,000 after falling below $79,000 during the morning.
Stocks rose following an economic report released in the morning that included both some encouraging and discouraging trends
Inflation across the country decelerated a bit and behaved pretty much exactly as economists expected, according to the measure that the Federal Reserve prefers to use. That’s good news for the entire market because it could give the Federal Reserve leeway to continue cutting its main interest rate at some point later this year.
That, in turn, could help goose the economy. The Fed has been keeping rates on hold so far this year after cutting them sharply late last year, in large part because of concerns about potentially stubborn inflation.
But Friday’s report also said that U.S. households pulled back on their spending during January. That’s dangerous because their strong spending has been a major reason the U.S. economy has avoided a recession despite high interest rates.
U.S. consumers had already given big hints they’re under pressure and worried. Inflation is still high, even if it’s not as bad as its peak from 2022, and a widespread worry is that tariffs announced by Trump could push prices for the cost of living even higher.
Wall Street hopes that all the talk about tariffs are merely a tool Trump is using to negotiate with other countries and that he’ll ultimately pull back on them, which would mean less pain for the global economy than initially feared.
