Weekend Market Recap: A Green Week That Didn’t Feel Green

What’s happening
Major US stock indexes rose slightly, as relief from tariffs and steadier tech stocks offset weaker GDP and ongoing inflation.

Why it matters
The market is adjusting for risk, not predicting a crash. Investors had become more cautious, and the recent rebound shows they are confident in some areas but not all.

What the market is missing
Private demand remains intact despite headline growth slowing. AI spending is cooling from extremes, not evaporating.

Key risk to watch
A new jump in inflation could push interest rate expectations higher and put pressure on stock prices.

Investor lens
Watch. Broadening participation beyond a handful of AI leaders would signal healthier conditions; renewed concentration would suggest fragility.

Stocks went up, GDP growth slowed, inflation stayed high, and concerns about AI remained. Was this just a relief rally, or is something more solid happening?

Some weeks, the market feels upbeat. This week was different.

The S&P 500 closed at 6,909.51, up 1.1% on the week. The Nasdaq Composite gained 1.5% to 22,886.07, ending a five-week losing streak. The Dow Jones Industrial Average added 0.3% to 49,625.97.

All three major indexes ended the week higher. Still, the mood was cautious. Investors were not celebrating; they were adjusting their strategies.

A lot happened at once: economic growth slowed more than expected, inflation stayed high, and late in the week, the Supreme Court struck down broad emergency tariffs, which briefly eased pressure on companies that rely on imports. None of these events were simple, but all were important.

In the fourth quarter of 2025, GDP grew at an annual rate of 1.4%, down sharply from 4.4% in the previous quarter and below expectations. The government shutdown reduced the headline number by about one percentage point. Without that, the economy is slower but not at a standstill. Consumer spending and business investment stayed positive, while government activity and net exports pulled growth down.

Inflation did not ease much. In December, core PCE was 3.0% year over year, and headline PCE was 2.9%. These numbers are lower than the peaks in 2022, but still above the Federal Reserve’s 2% goal.

In short, growth slowed, inflation stayed up, and interest rates probably will not drop soon.

Stocks rose anyway.

This shows that investors were already being cautious.

Late on Friday, the US Supreme Court ended broad 'emergency' global tariffs. The markets responded right away.

Retailers that rely on imports and large technology companies saw their stocks rise. The reason was simple: with fewer tariff risks, their profit outlook became clearer.

The relief was genuine, but it did not last. Policymakers soon suggested other ways to take trade actions. Investors understand that clear legal decisions do not always mean stable policies.

The market rally was more about removing a big risk than starting a new trend.

On Friday, nine out of eleven S&P 500 sectors ended the day higher.

Communication Services led the gains. Consumer Discretionary stocks got a boost from tariff relief. Technology stocks steadied after several weeks of declines.

Individual stocks showed that investors were being selective about taking risks:

Meanwhile, parts of software and cybersecurity remained under pressure:

This was not a widespread rush to take risks. Instead, investors were being selective, focusing on companies with steady cash flows and avoiding those under margin pressure or facing tough competition.

This is typical of a bull market that is growing more mature.

In the past month, excitement about AI has given way to caution. Worries about high spending and expensive stock prices led to a sharp drop in semiconductor and large tech stocks.

But this week had a different tone.

The question was no longer “Is this a bubble?” It became “At what price does this make sense?”

This is a more careful discussion, focused on earnings, free cash flow, and how long spending on AI infrastructure can support current stock prices.

So far, company earnings have held up. But expectations are now higher. Investors are not willing to pay any price for growth; they want proof.

Markets often shift from following stories to focusing on numbers. This week, the focus was on the numbers.

Financial markets try to reflect complex situations in prices, but prices rarely show the full picture right away.

There is a difference between a market that rises out of confidence and one that rises simply because investors are less fearful.