Stocks rebounded Friday as interest rates declined and rate cut hopes were renewed by more data pointing to weaker growth. The Dow Jones industrial average rose 1.4 percent while the S&P 500 and Nasdaq both gained 1.6 percent. US bond yields and oil prices declined while the dollar rose.

A reasssuring, as-expected inflation reading and surprising news that personal spending dropped by 0.2 percent in January fueled a rally in the bond market, sending market rates lower and lifting stocks. Through much of the week, equity investors reacted to a string of weak data by moving into risk-off mode but this time buyers returned in force. The market was boosted by bargain-hunting in Nvidia and other big technology favorites after they sold off through the week.

News of a much wider than expected trade deficit in January added to the view that first quarter GDP may show a contraction. The Atlanta Fed's GDPNow model was revised to show a 1.5 percent contraction in the economy for the first quarter, down from growth of 2.3 percent in the last estimate. Talk of slowing growth has come to dominate the market discourse as investors see uncertainty over President Trump's tariffs and other policies chilling investment and hiring while disrupting supply chains and boosting inflation.

Stocks retreated from their best levels at midday after a heated meeting between President Trump and Ukrainian President Zelenskyy in the White House, which prompted Trump to tell his Ukrainian counterpart he was gambling with World War III. Among sectors, best were consumer discretionary, consumer staples, utilities, and industrials.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.