US stocks pause after strong week as investors assess trade and inflation outlook

Wall Street closed mixed on Friday as investors took a breather after a strong week, digesting developments in global trade policy and inflation data.

While the Dow Jones Industrial Average dipped slightly, the S&P 500 and Nasdaq Composite eked out gains, reflecting continued optimism amid economic uncertainty.

Market sentiment remained resilient despite a sharper-than-expected decline in retail sales, as traders found reassurance in President Donald Trump’s measured approach to tariffs and inflation trends that may ease pressure on interest rates.

The Dow slipped 108 points, or 0.2%, while the S&P 500 edged up 0.1%, and the Nasdaq gained 0.3%.

For the week, the S&P 500 rose 1.5%, the Dow added 0.7%, and the tech-heavy Nasdaq outperformed with a 2.3% gain, buoyed by strong earnings in the sector.

Trade policy eases investor's nerves

A key driver of this week’s market momentum was Trump’s decision to implement trade tariffs selectively rather than imposing sweeping levies.

On Thursday, he signed a memorandum outlining a plan to impose tariffs on goods from countries that restrict US exports, alleviating concerns over a broader trade war.

This policy shift helped boost investor confidence, leading to a rally in equities.

Additionally, fresh economic data provided mixed signals.

While January retail sales fell 0.9%, worse than the expected 0.2% drop, traders largely brushed off the report.

More encouragingly, inflation data from the consumer price index (CPI) and producer price index (PPI) pointed to a softer outlook for the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index, due later this month.

This reinforced expectations that the Fed may not need to accelerate rate hikes, supporting equity valuations.

The 10-year Treasury yield fell over 6 basis points on Friday to 4.459%, continuing its downward trend this week.

Dell surges on AI-driven demand

Dell Technologies shares climbed more than 3% after Bloomberg reported that the company is nearing a deal to sell servers equipped with Nvidia chips to Elon Musk’s artificial intelligence startup, xAI.

The potential deal underscores the growing demand for AI infrastructure, fueling investor enthusiasm.

Dell’s stock is now up more than 9% for the month.

Other top news in US markets

The Trump administration’s 25% tariffs on steel and aluminum imports could trigger a wave of short covering in US steel stocks, according to S3 Partners.

Managing director Ihor Dusaniwsky stated that this move may spur increased buying in domestic metal and mining stocks while intensifying selling pressure in international counterparts, adding to market volatility.

Defense stocks remained under pressure following Trump’s remarks about potential defense spending cuts.

Despite his suggestion of a future trilateral agreement with China and Russia to reduce military expenditures by 50%, Wall Street analysts see no realistic path for such cuts, given broader geopolitical uncertainties.