The U.S. S&P 500 stock index was flat and on track to end the week slightly down, while the tech-heavy Nasdaq climbed 0.5%, also set to end the week slightly lower.
The Nasdaq had dropped 2.9% on Monday as the surging popularity of cheap Chinese AI model DeepSeek shook investor confidence in U.S. tech stocks and sent chipmaker Nvidia plunging 17%.
But earnings reports and forecasts this week from Meta and Tesla have helped sentiment recover somewhat.
Apple initially added to the cautiously optimistic mood late on Thursday when it forecast relatively strong sales growth, but its stock was last down about 0.4% in Friday trading.
European shares closed at a record high, led by technology stocks, as earnings from companies such as Novartis and Hexagon overshadowed concerns over economic recovery.
In currency markets, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.3%
Options contracts showed investors were preparing for potential swings in the Canadian dollar and Mexican peso. The Canadian dollar was flat and the peso was 0.1% higher in choppy trading.
Trump is threatening punitive duties if Canada and Mexico do not take stronger action to halt the flow of the deadly opioid fentanyl and precursor chemicals into the United States, as well as illegal migration.
“There is big market complacency in terms of the manner that the market could digest the tariffs,” said Michael Nizard, multi-asset chief investment officer at Edmond de Rothschild.
The euro and sterling both declined about 0.2% versus the dollar.
Data on Friday showed the U.S. personal consumption expenditures price index rose 0.3% last month after an unrevised 0.1% gain in November, in line with economists’ expectations.
“Disinflation continues, and should continue given underlying trends,” David Alcaly, lead macroeconomic strategist at Lazard Asset Management, said in an email.
“Concerns about recent bumpiness are overblown and have more to do with the potential for inflationary policy change like tariffs than with current conditions.”
The figures also showed consumer spending surged, briefly pushing up 10-year Treasury yields, which were last up 2.3 basis points to 4.535%.
Data on Thursday showed U.S. economic growth slowed in the fourth quarter, but remained robust enough for investors to expect the Federal Reserve – which held interest rates on Wednesday – to lower borrowing costs only gradually this year.
Euro zone short-dated government bond yields were on track to record their biggest weekly drop in months, after a raft of weak economic data led traders to ramp up their bets on future rate cuts from the European Central Bank. The ECB cut rates on Thursday and signaled more easing was coming.
Oil prices edged higher ahead of the new tariffs against Canada and Mexico. U.S. crude rose 0.54% to $73.11 a barrel and Brent climbed to $76.92 per barrel, up 0.07% on the day.
(Reporting by Lawrence Delevingne in Boston and Harry Robertson in London. Additional reporting by Iain Withers and Ankur Banerjee. Editing by Mark Potter, William Maclean, Barbara Lewis and Rod Nickel)
