North American stocks finished higher on Friday, rebounding from early declines after Federal Reserve Chair Jerome Powell said the economy was “in a good place,” but uncertainty about U.S. trade policy led to the biggest weekly decline in months.
Powell said the central bank will not be quick to cut interest rates and echoed concerns about President Donald Trump’s policies.
Markets have been roiled this week by uncertainty about Trump’s tariff decisions on imported goods from Canada, Mexico and China.
The benchmark S&P 500 finished with its biggest weekly loss since September. The S&P 500 and the Nasdaq also registered their third straight week of declines, the longest losing streak since mid-July and early August last year.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 174.72 points, or 0.7%, at 24,758.76. For the week, the index was down 2.5%, its biggest weekly decline since December.
Powell said the Fed will take a cautious approach to monetary policy easing, adding the economy currently “continues to be in a good place”.
“Powell is echoing what the rest of us feel: unease that while the adjustments made by the administration may well work and put the country on better financial footing, the speed and whipsaw-like nature of the change makes it difficult to predict and to plan around,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. “So, the best action when that occurs is to sit and wait.”
Stocks fell in choppy early trade, but rebounded after Powell’s comments.
Canada’s unemployment rate held steady at 6.6% in February but new job additions were only marginally up, falling well short of the 20,000 increase that analysts had forecast.
Investors see a 75% chance the Bank of Canada will cut its benchmark interest rate a further 25 basis points on March 12, after lowering the rate in January to 3%.
Trump railed against what he called tremendously high Canadian tariffs on dairy and lumber, and said his administration could impose reciprocal tariffs on Canadian products as early as Friday.
“It’s a constant barrage of tariff headlines,” said Angelo Kourkafas, a senior investment strategist at Edward Jones. “We have this looming uncertainty of what’s going to be the impact on the labor market for tariffs but likely today’s data solidifies an expectation that we are going to see the Bank of Canada cut rates next week.”
The TSX energy sector rose 2.4% as the price of oil recouped some recent declines. U.S. crude oil futures settled 1% higher at $67.04 a barrel.
Utilities added 1.5% as bond yields fell and heavily weighted financials ended 0.6% higher.
Shares of MDA Space Ltd jumped 17.7% after the space technology company forecast first-quarter revenue above estimates.
In the previous session, the Nasdaq confirmed a 10% drop from its December all-time high.
Utilities, energy, technology and industrials were the biggest gainers among the S&P 500′s 11 main sectors. Consumer discretionary, financials and consumer staples were the biggest drag.
The Dow Jones Industrial Average rose 222.64 points, or 0.52%, to 42,801.72, the S&P 500 gained 31.68 points, or 0.55%, to 5,770.20 and the Nasdaq Composite gained 126.97 points, or 0.70%, to 18,196.22.
For the week, the S&P 500 ended down 3.1%, the Nasdaq declined 3.45%, and the Dow fell 2.37%. The Russell 2000 Small Cap index fell 3.86%.
Data early on Friday showed U.S. job growth picked up in February from the previous month. However, thousands of recent firings of federal workers were not reflected in the data.
Unemployment ticked up to 4.1%, adding to worries about the economy’s resilience. Morgan Stanley and Goldman Sachs have lowered their growth forecasts for the economy.
“This is a growth scare,” said Adam Hetts, portfolio manager at Janus Henderson Investors. “This is what it feels like to go from a no-landing to a soft-landing environment and it’s unpleasant. It involves a spate of unpleasant economic data, and the primary driver being weaker consumer spending.”
On Thursday, Trump offered a four-week reprieve on tariffs he imposed on imports from Canada and Mexico that fall under a free-trade pact. The U.S. remains in a trade war with China.
Reciprocal trade barriers and other duties are expected to take effect in the following weeks.
Among U.S. stocks, Hewlett Packard Enterprise slumped 12% after saying its annual profit forecast would be hit by U.S. tariffs.
Costco fell 6% after the retailer missed Wall Street estimates on quarterly earnings as merchandise costs increased.
Broadcom gained 8.6% after the chipmaker assuaged investor worries about artificial intelligence infrastructure demand with a strong second-quarter forecast.
Advancing issues outnumbered decliners by a 1.35-to-1 ratio on the NYSE. There were 92 new highs and 136 new lows on the NYSE. The S&P 500 posted 8 new 52-week highs and 13 new lows while the Nasdaq Composite recorded 28 new highs and 159 new lows. About 16.92 billion worth of shares were traded across U.S. exchanges, compared with the 20-day moving average of 16.23 billion shares.
Reuters, Globe staff