4:10pm: Mixed day
US stocks ended mixed on Wednesday, with the Nasdaq leading gains as investors piled into technology shares following a softer inflation report.
The tech-heavy Nasdaq jumped 1.2%, or 212 points, to close at 17,648, extending its recent rally. The S&P 500 also finished in positive territory, rising 0.5%, or 27 points, to 5,599, as easing inflation concerns supported broader market sentiment.
Meanwhile, the Dow Jones edged lower, slipping 0.2%, or 83 points, to settle at 41,351. The blue-chip index struggled to recover from a steeper loss in the previous session.
Trading remained volatile as investors assessed mixed economic data and geopolitical uncertainties. Despite recent market fluctuations, all three major indexes remain up by double digits for the year.
3:01pm: Smaller increase in shelter costs is positive
The Atlanta Fed’s GDP Now forecast of -2.4% for Q1 highlighted economic risks, while inflation showed signs of softening, particularly in shelter costs. However, new tariffs on goods could push inflation higher in the coming months, XTB's Kathleen Brooks noted, though the effect may be muted if companies absorb some costs.
"Even though tariffs could upend the global disinflation trends, the details of the February CPI report are worth noting," Brooks commented.
"Although shelter costs rose at a 4.2% YoY rate, this was the smallest 12 month increase since December 2021. This is encouraging and suggests that inflation is softening. There is also a chance that inflation could moderate further next month, as signs of weak consumer sentiment weighs on price growth."
2:20pm: US steelmakers gain
US steel and aluminum stocks surged on Wednesday, despite President Donald Trump deciding not to move forward with additional tariffs on Canadian imports.
The rally comes after Trump initially proposed extra tariffs in response to Ontario’s 25% surcharge on power to Americans. However, the province backed down after the US president threatened to increase tariffs on steel and aluminum to 50%.
While the additional tariffs were avoided, the original 25% tariffs on steel and aluminum remain in place, boosting US metal stocks.
United States Steel Corporation (NYSE:X) rose 0.20% to $37.135, while Alcoa (NYSE:AA) gained 3.00%, reaching $32.92.
12:42pm: Canada announces more retaliatory tariffs
Canada has announced another C$29.8 billion in retaliatory tariffs in response to Trump’s steel and aluminum tariffs, on top of $30 billion in tariffs on US imports introduced earlier this month.
The new tariffs are targeting steel products worth C$12.6 billion, aluminum products worth C$3 billion and other goods worth C$14.2 billion impacting a range of products including computers, sports equipment, and cast iron products.
Canada’s finance minister Dominic LeBlanc said Canada “will not stand idly by while our iconic steel and aluminum industries are being unfairly targeted.”
“The US administration is once again inserting disruption and disorder into an incredibly successful trading partnership and raising the costs of everyday goods for Canadians and American households alike,” LeBlanc said.
12:00pm: Fed stands pat
"Comments from Chair Jerome Powell suggest the latest batch of soft activity data will not cause the FOMC to reassess its view that there is “no hurry” to cut interest rates again," said Stephen Brown, Deputy Chief North America Economist at Capital Economics.
"Admittedly, some FOMC participants may nudge down their rate expectations for this year amid signs of weaker growth. But we do not expect a major change on net, given others may have nudged up their rate projections due to concerns about inflation and inflation expectations amid the imposition of tariffs."
11:10am: Challenges for the Fed
Analysts are split on the potential impact of Wednesday's inflation reading on monetary policy.
Nikos Tzabouras, an analyst at Tradu, said the lower-than-expected inflation reading “can support a recovery in US equities, as it strengthens the case for the Federal Reserve to resume its rate-cutting cycle amid concerns over the economy and consumer spending.”
However, Tzabouras cautioned that the central bank faces a complex challenge and is unlikely to move quickly from its current holding stance.
Echoing similar concerns, Bill Adams, Chief Economist for Comerica Bank, remarked that inflation resumed its moderating trend in February after an interruption at the turn of the year.
He warned that “the dizzying back-and-forth over tariffs is a large and unpredictable upside risk to the inflation outlook.”
In contrast, Nigel Green of deVere Group emphasized a more urgent approach, stating that the Fed faces a difficult balancing act. “This dangerous mix—pockets of inflationary pressure alongside an economic slowdown—puts the Fed in a precarious position,” Green said.
He called for swift action, adding, “Rate cuts must come sooner rather than later to prevent deeper damage.”
9:55am: Tesla and Nvidia lead Nasdaq surge
Wall Street has had a mixed but mostly positive start, with the Nasdaq charging 1.5% higher but the Dow Jones seeing initial positives quickly erased.
In between, the S&P 500 has risen 0.7%, climbing up from yesterday's six-month low. The small cap Russell 2000 is up 1%.
The top riser on the S&P is Tesla, up 8.2%, with Palantir rising 7.5%, Super Micro Computer 7.2% and Nvidia 7.1%.
Holding the Dow back are further falls for Verizon Communications, down 4.4%, followed by Amgen, Travelers Companies, Merck & Co and McDonalds Corp.
8:37am: US inflation eases more than expected
Stock futures have perked up further after US inflation for February came in lower than expectations.
The headline US consumer price index for February was up 2.8% compared to a year ago, down from 3.0% in January and below the consensus forecast of 2.9%.
CPI was up 0.2% from January, lower than the 0.3% month-on-month estimate.
Core CPI, which excludes fuel, food and other volatile prices, was up 3.1% on the year, from the previous 3.3% and below the 3.2% consensus forecast.
On the month, core CPI was up 0.2%, from 0.4% in January and versus the 0.3% expected.
Following that, S&P futures are now up 0.8%, Nasdaq futures up almost 1% and Dow futures up 0.5%.
8:00am: S&P 500 to bounce back from six-month low, Nasdaq tech to lead gains
Wall Street tech stocks are set to drive a rebound on Wednesday as US tariffs on global steel and aluminum products begin, though US inflation numbers before the opening bell may change sentiment.
The S&P 500 is predicted to climb off a six-month low as futures rose 0.8%, while futures for the tech-powered Nasdaq were up 0.9% and for the Dow Jones were up 0.5%.
The previous day, the Dow Jones tumbled 1.1% and the S&P 500 dropped 0.8%, while the Nasdaq dipped 0.2% as President Trump threatened a further escalation in the trade war against Canada.
Losses were pared as both sides retreated from some of the more aggressive tariffs, with news that Ukraine had agreed to a potential ceasefire helping markets to recover, with the domestically-focused Russell 2000 managing to scrape into positive territory by the close.
Today, the European Union has launched a series of "countermeasures" in response to the US tariffs.
Brussels said its response is "swift and proportionate", with retaliatory tariffs on US goods worth €6.4 billion from 1 April on products ranging "from boats to bourbon to motorbikes", with plans for a package targeting a further €18 billion of US exports in the pipeline.
But today is "all about the CPI report" says market analyst Kenny Polcari at Slatestone Wealth.
Deutsche Bank macro strategist Jim Reid said: "This will be an important one ahead of the Fed’s decision next Wednesday, as another strong print would make it more difficult for them to cut rates this year, particularly given the potential inflationary impact of tariffs in the coming months."
David Morrison, market analyst at Trade Nation, said: "If inflation comes in below expectations, then this could provide a catalyst for dip buyers to pour in. If it disappoints, then that increases the danger of further weakness
On tariffs, he added the postponements, exceptions and retaliations mean "investors are struggling to keep up".
While there are concerns that the world is on the brink of an all-out trade war and risk a US recession sometime this year, "there’s still time for deals to be made before too much damage is done".