Wall Street advanced on Wednesday as cooler-than-expected inflation data helped stem a sharp selloff among growth stocks. However, gains were capped as U.S. President Donald Trump’s escalating tariff war continued to unsettle markets.
Market Reaction to Inflation Data
The S&P 500 and the tech-heavy Nasdaq moved into positive territory, with the latter benefiting from a strong performance in technology shares, particularly microchips.
The Labor Department’s Consumer Price Index showed consumer prices rising at a slower pace than expected, reinforcing hopes that inflation is cooling. This has fueled speculation that the U.S. Federal Reserve might consider interest rate cuts this year.
“Equities are higher on the expectation that the Fed could consider additional rate cuts,” said Paul Nolte, senior wealth adviser at Murphy & Sylvest. “But CPI is looking backward—we still don’t have a good sense of what the tariffs may do to inflation.”
Trump’s Tariff Moves Raise Concerns
In his latest move, Trump imposed 25% tariffs on imported steel and aluminum, prompting immediate retaliation from Canada and Europe. These countermeasures have heightened fears that the ongoing trade war could tip the U.S., Canada, and Mexico into recession.
Goldman Sachs has lowered its year-end target for the S&P 500, while J.P. Morgan has increased the odds of a U.S. recession.
On Monday, the S&P 500 briefly dipped below its 200-day moving average for the first time since November 2023, a significant technical support level. Meanwhile, the Nasdaq has been in correction territory since March 6, having fallen more than 10% from its December 16 record high.
Stock Market Performance
- The Dow Jones Industrial Average fell 63.60 points (0.15%) to 41,369.88.
- The S&P 500 gained 23.30 points (0.42%) to 5,595.37.
- The Nasdaq Composite added 168.01 points (0.97%) to 17,604.11.
Sector Performance and Key Stocks
Technology shares led gains among the 11 major S&P 500 sectors, while consumer staples and healthcare stocks lagged.
- Intel (INTC.O) surged 3.5% after reports that TSMC had pitched Nvidia, AMD, and Broadcom about taking a stake in a joint venture to operate Intel’s U.S. chip factories.
- PepsiCo (PEP.O) declined 2.3% after Jefferies downgraded the stock to “hold” from “buy.”
Broader Market Trends
Investors also monitored developments on Capitol Hill, where lawmakers are working on a stopgap spending bill to prevent a government shutdown.
Advancing issues outnumbered decliners by a 1.09-to-1 ratio on the NYSE, with 22 new highs and 154 new lows. On the Nasdaq, 2,471 stocks rose while 1,823 declined, with advancing issues leading by a 1.35-to-1 ratio.
Looking Ahead
Market volatility is expected to continue as investors weigh the impact of Trump’s tariff policies against improving inflation trends. With uncertainty surrounding trade policies and economic growth, Wall Street remains on edge.
