Closing Bell: Tariff Relief Rally Offsets Geopolitical Risk; Metals Shine as Dollar Slips
U.S. equities closed higher as markets digested a heavy macro slate and a major legal headline. A softer dollar, cooling volatility, and clarity around tariffs helped risk appetite recover even as geopolitical tensions with Iran lingered into the weekend. The VIX slipped back below 20, signaling reduced stress after earlier spikes this week. Meanwhile, gold, silver, and copper climbed, crude oil finished roughly flat after a strong week tied to Middle East risk, and Treasury yields steadied slightly higher on bid for equites.
Three things that mattered today
1) PCE, GDP, and Supreme Court tariff ruling drive cross-asset reaction
The macro calendar delivered. The latest PCE inflation report showed headline inflation moderating on a year-over-year basis, while the month-over-month reading came in near expectations, reinforcing a gradual disinflation narrative. At the same time, the first GDP print pointed to continued but slowing economic expansion, consistent with a late-cycle soft-landing scenario rather than contraction.
Markets also reacted to a closely watched Supreme Court ruling on tariffs, which signaled limits on the administration’s ability to unilaterally expand certain trade measures. The decision reduced near-term tariff uncertainty, lifting sectors most sensitive to import costs and global supply chains. Equity markets interpreted the ruling as marginally growth-positive and inflation-dampening.
2) Risk-on recovery in tariff-exposed and growth names
With tariff overhang easing and inflation not reaccelerating, investors rotated back into technology and communications services, particularly companies less directly exposed to trade friction and more exposed to consumer growth & advertising such as GOOGL and META. Growth-sensitive software and platform names caught slight bids, and the broader communications sector advanced on improved sentiment.
Consumer Discretionary stocks also rallied, reflecting expectations of lower input cost pressure and better margin visibility if tariff expansion is curtailed. The rotation marked a reversal from earlier defensive positioning.
3) Defensive sectors retreat as safe-haven flows shift
While risk assets firmed, traditional defensives softened. Staples, Health Care, Energy, and Materials lagged the broader tape as investors reduced protection exposure. Oil, which had rallied earlier in the week on rising tensions involving Iran, ended the day roughly flat as traders balanced geopolitical risk against softer dollar dynamics. Precious metals outperformed, with gold and silver rising on currency weakness and ongoing global uncertainty.
Geopolitical overhang
Despite today’s rally, markets remain attentive to developments in Iran, particularly given elevated tensions heading into the weekend. Energy markets and defense-sensitive sectors could remain reactive to headlines.
What’s next — Monday, Feb 23 (ET)
Economic data
10:00 a.m. — Factory Orders (MoM) (Dec)
A key read on manufacturing demand and capital spending momentum.
Earnings
Before market open:
Domino's Pizza (DPZ)
Dominion Energy (D)
Lincoln Educational Services (LINC)
After market close:
Keysight Technologies (KEYS)
Diamondback Energy (FANG)
Kratos Defense (KTOS)
Allison Transmission (ALSN)
Ultra Clean Holdings (UCTT)
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