Market Rallies Through Policy Turbulence as S&P 500 Reclaims Key Technical Level

Stocks navigated a volatile session Friday, overcoming a barrage of macroeconomic and policy developments to finish the week on a strong note. The S&P 500 gained 0.7%, the Nasdaq Composite rose 0.9%, and the Dow Jones Industrial Average advanced 0.5%. Notably, the S&P 500 closed back above its 50-day moving average, signaling a potential improvement in near-term technical momentum.

The session began on shaky footing following a disappointing slate of economic data. The advance estimate of fourth-quarter GDP showed weaker-than-expected growth alongside a hotter inflation reading, while December’s PCE Price Index also came in slightly above forecasts. The data reinforced concerns that inflation remains sticky and could delay expectations for Federal Reserve rate cuts.

Markets then swung sharply higher after the Supreme Court struck down President Trump’s sweeping IEEPA tariffs. The rally was partially tempered when the president announced plans to impose a temporary global tariff under a different statutory authority, creating uncertainty about trade policy and potential refund complications.

Despite midday turbulence, stocks stabilized and pushed higher into the close. Nine S&P 500 sectors finished in positive territory, reflecting broad participation in the rally.

Communication services led the advance, surging 2.7%. Alphabet and Meta Platforms drove the gains, aided by reports that Alphabet is exploring strategies to strengthen its AI chip ecosystem and compete more directly with NVIDIA.

Consumer discretionary also outperformed, rising 1.3% after a volatile session tied to tariff headlines. Amazon stood out among mega-caps, benefiting from the initial tariff ruling given its exposure to global imports. Post-earnings strength continued in eBay and Garmin, while Nike swung sharply before ending modestly lower.

Technology posted a more measured gain of 0.6%. Software stocks remained weak, but semiconductor strength offset those declines. NVIDIA and Apple helped lift the sector, contributing to a broader rebound in mega-cap growth stocks.

Energy lagged, slipping 0.7% as oil prices paused after a strong recent run, even as geopolitical tensions between the U.S. and Iran remained elevated. Health care also finished slightly lower, reflecting modest defensive rotation.

Smaller-cap performance was mixed. The Russell 2000 edged down 0.1%, while the S&P MidCap 400 gained 0.6%, continuing its relative strength trend this year.

Overall, the market demonstrated resilience amid competing forces of inflation concerns, shifting trade policy, and geopolitical risks. The week’s advance was particularly significant for growth stocks, as the Nasdaq Composite snapped a five-week losing streak.

With major technology earnings on the horizon—most notably from NVIDIA next week—investors now turn their attention to whether improving momentum can be sustained in the face of ongoing macro uncertainty.

Our FTInvest 11 model portfolio edged up 0.06% to close at 1,017.82, posting a modest rebound after recent minor declines. The portfolio continues to stabilize following its earlier surge to an all-time high of 1,039.51, with daily movements reflecting a consolidation phase.

While momentum has cooled compared to the strong breakout earlier this month, FTInvest 11 remains solidly above the 1,000 milestone. The portfolio’s disciplined, value-driven framework continues to provide resilience as markets move through a more balanced and less directional period.