The broader market rose higher on Wednesday, snapping multiple sessions of losses, after a soft inflation report helped ease some worries about the health of the U.S. economy. The S&P 500 Index added about 0.5%, while the tech-heavy Nasdaq Composite climbed over 1.2% as investors bought-the-dip in growth stocks. The Dow Jones Industrial Average, however, slipped over 80 points.
Here's how the market settled on Wednesday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Market participants were encouraged by February's consumer price index (CPI) reading on Wednesday, which showed the prices for goods and services rising by a less-than-expected, seasonally adjusted rate of 0.2%, according to the Bureau of Labor Statistics. The reading was below January's rise of 0.5% and brought the annual inflation rate to 2.8%.
Excluding food and energy prices, core CPI also rose by a 0.2% clip for the month and 3.1% annually, marking the lowest reading since April 2021. January's core CPI had risen by 0.4%.
Still, market participants are wary of the looming impacts of President Donald Trump's trade war with nations including Canada, Mexico, China and the European Union.
"A lot of this inflation data does not incorporate what is to come and what already has happened for tariffs," and Kevin Gordon, senior investment strategist at Charles Schwab, quoted by CNBC. "The vagaries and uncertainties associated with policy are still a much stronger force in the market than anything CPI-related or in terms of one data point."
Deutsche Bank Strategist Mallika Sachdeva believes that current global trade as we know it could be reshaped due to Trump's back-and-forth tariff enactments.
"The outstanding question is whether trade will now enter an outright decline, or evolve anew with reduced US leadership and involvement," Sachdeva wrote in a recent note. "Taking a step back from the ongoing news flow, we look at the longer-term forces that are likely to shape global trade going forward, focusing on the four key economic blocs."
Those forces are: "U.S. energy independence is enabling a return to more protectionist roots;" "China will likely remain trade-focused to secure resources, export markets, and influence;" "Trade lies at the heart of the European project and this is not likely to change;" and "Many countries in the Global South will likely continue to look to trade for development even as it gets more challenging," according to Sachdeva.
