Stocks zigzag to close mostly higher Wednesday on cooler inflation, as tariff fears linger
U.S. stocks finished mostly higher after a back-and-forth day of trades Wednesday as investors shrugged off concerns about a simmering trade war to focus on a cool inflation reading.
The broad S&P 500 added 27.23 points or 0.5% to close at 5,599.30, while the Dow Jones Industrial Average fell 82.55 points or 0.2% to finish trading at 41,350.93. The tech-focused Nasdaq jumped 1.2%, adding 212.35 points to close at 17,648.45. The benchmark 10-year U.S. Treasury note closed at 4.32%.
Consumer prices rose 2.8% over the past year in February, the Labor Department said Wednesday. That was lower than the 3% yearly gain in January, and snapped a four-month stretch of annual price gains. CPI is still much higher than the Federal Reserve’s 2% goal, however, and many analysts believe tit-for-tat tariffs will keep prices elevated.
President Donald Trump's increased tariffs on steel and aluminum imports went into effect Wednesday after several days of negotiations and threats with trading partners. The Associated Press reported Wednesday morning that On Wednesday, both Canada and the European Union said they would slap an additional round of tariffs on the U.S. in the latest trade war salvo.
“Instead of saying we’re back off to the races, we would use this opportunity to dial back risk,” said Keith Lerner, chief market strategist and co-CIO for Truist. The bank cautioned in late February that a “modest deterioration in earnings, technical, and economic trends” might warrant more caution.
Now, Lerner told Paste BN, anyone who wants to invest more defensively might look to do so on days like Wednesday. “We think we’re going to have a couple months of turbulence,” he said. “I think there will be a point where the market likely will have more balance. There is a patch of fog right now, and one thing we’re seeing from companies is more tepid outlooks.”
Vera Bradley Inc. shares fell more than 3% after a big earnings miss, but were off earlier lows. Shares of Porsche closed lower in German trading Wednesday after the car giant issued its second profit warning in as many months.
On Wednesday, a measure of volatility in the stock market retreated. The CBOE Volatility Index, or VIX, sometimes called the “fear index,” was down 10%, after surging nearly 60% over the past month.
“VIX clearly says US stocks are oversold enough that they should bounce here and, even with all the policy uncertainty swirling in Washington, it seems a stretch to compare those issues to 2022’s European land war/oil price spike and aggressive Fed policy,” wrote Nicholas Colas, co-founder of DataTrek Research, in a Tuesday note.
“The bull market that started in October 2022 may be on pause, but it’s way too early to say that it has morphed into a full blown bear,” Colas added.
Shares of Tesla, Inc., which have been battered by protests over chairman Elon Musk’s role in federal government layoffs, rebounded to close more than 7% higher Wednesday.
Intel Corporation shares closed up nearly 5% after reports that several chipmakers are considering buying the company’s foundry division.