U.S. and Canadian stocks ended higher on Friday after a choppy trading session after a meeting between the U.S. President Donald Trump and Ukrainian counterpart Volodymyr Zelensky ended in disaster. A decline in bond yields helped to give tech stocks a boost.
Zelensky and Trump traded verbal blows at the White House before the world’s media. This created fresh uncertainty over Ukraine’s war with Russia for investors already worried about sticky U.S. inflation and a tepid economy.
The S&P 500 moved lower immediately after the clash before recovering and ending the day with a gain.
Zelenskiy left the White House without signing a much-vaunted deal between Ukraine and the U.S. over the joint development of natural resources.
“The news, if you watched it live, it was pretty worrisome. It got heated, and Zelensky is considered an ally of the U.S.,” said Adam Sarhan, chief executive at 50 Park Investments. “That’s why the market sold off, but then cooler heads prevailed. Zelensky either is going to make a deal or he’s not.”
Some investors sought the security of the bond market. Benchmark 10-year Treasury yields, which move inversely to prices, declined after the public confrontation and were last seen at 4.23% from about 4.27% earlier on Friday. The Canadian 10-year yield touched its lowest level since February 3 at 2.901%, tracking moves in U.S. Treasury yields.
“It’s disturbing,” said Jack McIntyre, portfolio manager at Brandywine Global. “It looked like we were moving towards progress on a peace deal or a ceasefire between Russia and Ukraine and maybe now that gets to come on hold, so you have to price in a little bit more uncertainty,” he said.
The heated confrontation came amid expectations Trump will soon impose punitive tariffs on key U.S. trade partners, which has raised investor fears of a spike in inflation and a hit to economic growth. He said on Thursday his proposed 25% tariffs on Mexican and Canadian goods will take effect on March 4, along with an extra 10% duty on Chinese imports.
“The unconventional nature of (the exchange) raised the issue for investors of how unpredictable and uncertain the Trump administration can be,” said Rick Meckler, a partner at Cherry Lane Investments.
“There are so many things happening in this government at once - all of which are to some extent groundbreaking - and this just added one more feature to it. So that’s where the market (took a) leg down a little bit, thinking this is just a sign of a lack of predictability and more traditional approaches to diplomacy,” he said.
Earlier, a Commerce Department report showed inflation rose in January in line with expectations. However, consumer spending, which accounts for more than two-thirds of the economy, dropped 0.2% after an upwardly revised 0.8% increase in December. This could complicate the Federal Reserve’s deliberations on monetary policy.
“Spending came in lower than we were looking for... most of it I would attribute to a cooling economy, which presents a dilemma for the Fed in the sense that you still have inflation and you have an economy that is moving lower. If you add them together, that equals stagflation,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
Friday’s report is important for investors trying to gauge the next move for the central bank after policymakers reiterated a hawkish stance. Investors worry Trump’s policies, especially trade restrictions, could exacerbate U.S. inflation.
Traders see the Fed lowering borrowing costs twice by December, little changed from before the report, according to data compiled by LSEG.
The CBOE Volatility Index, also known as Wall Street’s fear gauge, touched a one-month high and was last up at 21.26 points.
The S&P 500 climbed 1.59% to end the session at 5,954.50 points.
The Nasdaq gained 1.63% to 18,847.28 points, while the Dow Jones Industrial Average rose 1.39% to 43,840.91 points.
The S&P/TSX composite index ended up 265.21 points, or 1.1%, at 25,393.45. For the month, the index was down 0.6% as investors grappled with the threat of hefty U.S. tariffs on Canadian goods.
“The big picture is the whole tariff situation ... that’s weighing on investor sentiment to some extent,” said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth. “But at the same time, bank earnings, for instance, were exceptionally strong ... and I think that provided a measure of relief that the economy is perhaps on a better footing than most people expected.”
Canada’s gross domestic product expanded by 2.6% on an annualized basis in the fourth quarter, eclipsing forecasts for an increase of 1.8%, helped by a jump in consumer spending.
The six big Canadian banks, which are among the biggest publicly listed companies in Canada, this week beat analysts’ expectations for first-quarter profits.
The financials group rose 1.3% on Friday, helped by a gain of 2.7% for Royal Bank of Canada.
Industrials added 1.7%, while utilities ended 1% higher as bond yields declined.
The TSX is set to reach a new record high by the end of 2025, helped by lower borrowing costs, but an uncertain outlook for global trade could limit gains and potentially trigger a correction, a Reuters poll found on Wednesday.
Among U.S. stocks, Dell dropped 4.7% after the PC maker forecast a decline in its adjusted gross margin rate for fiscal 2026.
Peer HP Inc fell 6.8% after its quarterly profit forecasts missed expectations.
Nvidia and Tesla rose almost 4% each and lifted the S&P 500.
Volume on U.S. exchanges was heavy, with 17.5 billion shares traded, compared to an average of 15.4 billion shares over the previous 20 sessions.
All 11 S&P 500 sector indexes rose, led by financials , up 2.1%, followed by a 1.8% gain in consumer discretionary.
For the week, the S&P 500 fell about 1%, the Nasdaq lost 3.5% and the Dow climbed almost 1%.
The Nasdaq lost about 4% for all of February, its deepest monthly loss since April 2024. The S&P 500 fell 1.45% for the month and the Dow lost 1.6%.
Advancing issues outnumbered falling ones within the S&P 500 by a 7.1-to-one ratio.
The S&P 500 posted 39 new highs and 14 new lows; the Nasdaq recorded 43 new highs and 332 new lows.
Reuters, Globe staff