U.S. markets mostly ignored a contentious exchange between Ukrainian President Volodymyr Zelensky and U.S. President Donald Trump in the Oval Office on Friday, during which Trump accused Ukraine of gambling with “World War III.”
Following an initial decline in stocks and a brief increase in Wall Street’s “fear gauge,” U.S. stocks ended the day significantly higher. Keith Lerner, co-chief investment officer at Truist Advisory Services, described the exchange as more “theater” from Trump amid optimism that a peace agreement between Russia and Ukraine could still proceed.
According to Lerner, “rightly or wrongly,” the response from European and American stocks indicates that “ultimately a deal still gets done.”
Following the Trump-Zelensky exchange, which took place during a meeting intended to advance a Russia-Ukraine peace deal and a Ukraine-U.S. minerals contract, stocks experienced a temporary decline. Instead, tensions erupted, and the meeting was abruptly ended. However, the afternoon session saw a rise in stocks.
“This is a very emotional time,” Richard Steinberg, Focus Partners Wealth’s chief market strategist, warned investors not to make any hasty market decisions.
The stock market has had a rough February as consumer mood has deteriorated, bitcoin (BTCUSD) and megacap tech firms MAGS have faltered, some of the well-liked “Trump trades” after the November election have waned, and speculation about a possible correction in stocks has gained traction.
According to Dow Jones Market Data, the S&P 500 SPX dropped 1.4% for the month, the Dow Jones Industrial Average DJIA dropped 1.6%, and the Nasdaq Composite COMP declined 4%.
A more mixed forecast for the U.S. economy and forward corporate earnings that have “flatlined”—losing momentum while valuations remain high—led Lerner’s team to downgrade stocks from “attractive” to “neutral” earlier this week.
At 4.23% on Friday, the 10-year Treasury yield BX:TMUBMUSD10Y has sharply declined from its most recent top of 4.8% and may be a symptom of worries about the US economy.
