U.S. stock index futures edged higher Wednesday evening following a market rebound, as investors reacted to softer-than-expected inflation data. However, gains remained limited due to new tariff threats from former President Donald Trump.
- S&P 500 Futures rose 0.3% to 5,622.0 points
- Nasdaq 100 Futures climbed 0.4% to 19,687.0 points
- Dow Jones Futures gained 0.2% to 41,484.0 points
February’s Consumer Price Index (CPI) rose 2.8% year-over-year, easing from 3% in January and below economists’ 2.9% forecast. The core CPI, which excludes food and energy prices, saw its smallest increase since 2021 at 3.1%.
These figures reinforced expectations that the Federal Reserve could begin cutting interest rates later this year. Markets currently anticipate at least three rate cuts in 2025, according to the CME FedWatch Tool.
In Wednesday’s session:
- S&P 500 gained 0.5%
- Nasdaq Composite surged 1.2%
- Dow Jones dipped 0.2%
Tech stocks saw strong buying momentum, with NVIDIA (NASDAQ: NVDA) jumping 6.4% and Tesla (NASDAQ: TSLA) soaring 7.6%.
Trump Tariffs Threaten Market Stability
Despite positive inflation data, investors remained cautious as Trump reinstated 25% tariffs on steel and aluminum imports, a move aimed at supporting U.S. manufacturing.
In response, the European Union (EU) announced counter-tariffs targeting $28 billion worth of American goods, including major U.S. exports such as agricultural products and motorcycles.
- Trump warned of further tariff escalations if the EU moves forward
- Canada imposed $21 billion in retaliatory tariffs, affecting U.S. steel and aluminum
- Higher prices on imported goods could weaken consumer spending
Economic analysts suggest prolonged trade disputes could erase the benefits of cooling inflation, as rising costs are passed on to businesses and consumers.
Market Outlook: Will Rate Cuts Offset Trade Risks?
While the Federal Reserve is expected to cut rates, analysts warn that tariff-related inflation and geopolitical tensions could delay policy easing.
- Recession fears persist, with January’s consumer spending dropping for the first time in two years
- ING analysts predict the Fed may hold off rate cuts until at least September
- Morgan Stanley remains cautiously optimistic, maintaining an Overweight rating on major indices
With Wall Street at a crossroads, investors will be closely watching the next Federal Reserve meeting, trade developments, and corporate earnings reports for further market direction.