Zelenskiy and Trump traded verbal blows at the White House before the world's media over Ukraine's war with Russia. That added fresh uncertainty for investors already worried about sticky U.S. inflation and a tepid economy.
U.S. stocks moved lower immediately after the clash, then recovered and moved higher.
Zelenskiy left the White House without signing a much-vaunted deal between Ukraine and the U.S. over the joint development of natural resources.
"The news, if you watched it live, it was pretty worrisome. It got heated, and Zelenskiy is considered an ally of the U.S.," said Adam Sarhan, Chief Executive at 50 Park Investments. "That's why the market sold off, but then cooler heads prevailed. Zelenskiy either is going to make a deal or he's not."
Earlier, a Commerce Department report showed inflation rose in line with expectations in the previous month. However, consumer spending, which accounts for more than two-thirds of the economy, dropped 0.2% after an upwardly revised 0.8% increase in December. This could complicate the Federal Reserve's deliberations on monetary policy.
"Spending came in lower than we were looking for... most of it I would attribute to a cooling economy, which presents a dilemma for the Fed in the sense that you still have inflation and you have an economy that is moving lower. If you add them together, that equals stagflation," said Peter Cardillo, chief market economist at Spartan Capital Securities.
Friday's report is important for investors trying to gauge the next move for the central bank after policymakers reiterated a hawkish stance. Investors worry Trump's policies, especially trade restrictions, could exacerbate U.S. inflation.
"Tariff talk certainly is having a negative effect on the stock market, and it probably will keep a lid on stock market advances until there's more clarity around that," said Sam Stovall, chief investment strategist at CFRA Research.
