Tech stocks rebound after soft US inflation data, while trade tensions fuel market volatility
On Wednesday, the Nasdaq Composite gained 1.22 percent, closing at 17,648.45, following a lower-than-expected inflation report that alleviated economic concerns.
According to CNBC, the S&P 500 rose 0.49 percent to end at 5,599.30, while the Dow Jones Industrial Average dropped 82.55 points, or 0.2 percent, to 41,350.93.
Despite the tech sector being down more than 3 percent for the week, technology stocks rebounded to drive the S&P 500 higher.
Nvidia surged 6.4 percent, AMD climbed over 4 percent, Meta Platforms rose 2 percent, and Tesla jumped more than 7 percent.
According to CNBC, the US consumer price index increased 0.2 percent in the past month, bringing annual inflation to 2.8 percent. Both figures came in below Dow Jones estimates of 0.3 percent monthly and 2.9 percent annually.
Core CPI, which excludes food and energy, rose 0.2 percent monthly and 3.1 percent annually, also below expectations.
Dave Grecsek, managing director in investment strategy and research at Aspiriant Wealth Management, noted that the inflation data weakens the stagflation narrative and allows more policy flexibility from the Federal Reserve.
“If this inflation number was higher, you’d have some of these concerns weighing much more heavily, like the Fed would not be in a position to respond if the economy continues to weaken,” he said.
Meanwhile, US trade tensions escalated as President Donald Trump’s steel and aluminum tariffs took effect on Wednesday.
Canada announced 25 percent retaliatory duties on over US$20bn worth of US goods, while the European Union pledged counter-tariffs on US$28.33bn worth of US imports starting in April.
Concerns over a potential US recession have contributed to market pressure, as investors worry that Trump’s trade policies could fuel inflation while slowing economic growth.
Major US indices have declined roughly 3 percent this week alone. On Tuesday, the S&P 500 briefly entered correction territory, dropping 10 percent from its February peak.
Over the past month, the S&P 500 has lost more than 7 percent, while the Dow and Nasdaq have fallen 6.8 percent and 10.2 percent, respectively.
Grecsek remarked on the market’s decline, stating, “We’re not surprised the market’s pulled down. Obviously, US equity markets have been exceptionally strong over the last two years. It’s right to expect a correction.”
He added that these are early stages of key fiscal policy changes, and “there’s better news to come.”
