Investing.com -- The S&P 500 rebounded on Friday, but it still closed out its worst week in months as investors reacted to a series of trade policy developments.
The index gained 0.55% to finish at 5,770.20, while the Nasdaq Composite advanced 0.7% to 18,196.22. The Dow Jones Industrial Average rose 222.64 points, or 0.52%, to 42,801.72.
Markets saw choppy trading throughout the session, with the Dow at one point dropping more than 400 points before staging a late-day comeback. Both the S&P 500 and Nasdaq were down more than 1% at their session lows.
For the week, the S&P 500 logged a 3.1% decline, marking its worst performance since September. The Dow shed 2.4% over the same period, while the Nasdaq dropped 3.5%, briefly entering correction territory after falling 10% from its recent peak.
Traders largely shrugged off a weaker-than-expected jobs report, which raised fresh concerns about a potential economic slowdown.
February nonfarm payrolls rose by 151,000, missing the Dow Jones consensus estimate of 170,000, while the unemployment rate edged up to 4.1%. The report briefly pushed Treasury yields lower before markets stabilized.
U.S. inflation data will be a key focus this week, with the latest Consumer Price Index (CPI) figures set for release. Consensus estimates point to core inflation easing to 0.3% from 0.4% on a monthly basis, while the headline rate is expected to slow to 0.3% from 0.5%.
“While this would mark a notable moderation from January, it would still be a sticky-high print,” Bank of America (NYSE:BAC) strategists said in a note.
They expect that tariffs on China will drive up core goods prices, excluding used cars, due to trade composition, while core services inflation is projected to ease but remain above levels aligned with the Fed’s target.
“This would reinforce our view that progress on inflation has stalled,” the strategists added.
Alongside the CPI data, official producer price figures will also be released and closely watched for signs of tariff-driven inflation pressures.
Earnings: Oracle, Adobe, Nio to report this week
The fourth-quarter earnings season is nearing its end.
This week, attention turns to Oracle Corporation (NYSE:ORCL), a major player in the AI boom, which is set to release its latest financial results on Monday after the market close.
Analysts expect the Austin-based cloud software company to report adjusted earnings per share (EPS) of $1.49 and third-quarter fiscal 2025 revenue of $14.39 billion. If the consensus holds, revenue growth would reach 8.35% year over year, slightly below the 9% recorded in the previous quarter.
Oracle’s report will be followed by electric vehicle (EV) maker Nio’s (NYSE:NIO) earnings on Tuesday and Adobe’s (NASDAQ:ADBE) on Wednesday.
What analysts are saying about US stocks
Citi: “A -10% retrenchment from the February 19 highs would take the S&P 500 toward the 5500 level. Based on our current fundamental expectations this would provide an attractive risk/reward setup relative to our current 6500 base case. Of course, at issue is the pending impact of tariff readthroughs to earnings.”
Morgan Stanley (NYSE:MS): “Our work on the tariff risk to earnings and fiscal headwinds suggest that the low end of the first half range is ~5,500. Our year-end 2025 base case price target remains 6,500, though the path is likely to be volatile as the market continues to contemplate these growth risks for the time being. This fits with our long-standing view that policy would likely be sequenced in a more growth-negative way to start the year before lower deficits/rates and less crowding out of the private economy benefit the market later in the year— No Pain, No Gain.”
BCA Research: “There is an alternative to investing in US stocks: Do it via Europe (DIVE). Allocate to European sectors or stocks that are highly and positively correlated with the Magnificent 7 but do not suffer stretched valuations. The Magnificent 7 will continue to drive the performance of US equities in the near-to-medium term. European equities are currently trading at a near-record high discount to US equities.”
RBC Capital Markets: “Investor, corporate, and political vibes have continued to weaken, and we continue to believe that the risk of a growth scare (14-20% drawdown peak to trough) in the S&P 500 has risen.”
“Valuations are coming down for the biggest names in the S&P 500 and the rest of the index, but at 24x and 17x respectively are still well above average.”
HSBC: “We are upgrading Europe (ex UK) to overweight (from underweight) and downgrading the U.S. to neutral.”
“It is important to stress that we are not turning negative on US equities – but tactically, we see better opportunities elsewhere for now. Prevailing uncertainty around tariffs could see US equities remain challenged in the next few weeks, but we are hesitant to turn too cautious on the medium-term outlook.”