Stocks rose on Wednesday after a soft inflation report eased concerns about the economy, prompting investors to purchase beaten-up technology shares. The tech-heavy Nasdaq added 1.22% and closed at 17,648.45, while the S&P 500 gained 0.49% to end at 5,599.30. The Dow Jones Industrial Average slipped 82.55 points, or 0.2%, to settle at 41,350.93.
The CPI-based Ecumenical Underlying Inflation Measure was 3.0% in Feb, down from 3.1% in Jan. Notably little dispersion in 3/6 month measures w/ or w/o shelter etc. So uniformly an elevated story
Note CPI-PCE divergence has been unusually large so expect PCE-based to be lower. pic.twitter.com/wVThMiP1Iy
— Jason Furman (@jasonfurman) March 13, 2025
Despite the tech sector being down more than 3% for the week, it rebounded on Wednesday to lift the S&P 500. For instance, Amazon gained 6.4%, Apple added more than 4%, Google advanced 2%, and Microsoft jumped more than 7%. The consumer price index (CPI), a broad measure of costs across the U.S. economy, increased 0.2% for February, putting the annual inflation rate at 2.8%.
This was lower than the Dow Jones estimates for a 0.3% monthly increase and a 2.9% annual rate.
Will come back this afternoon with CPI analysis and more charts. But for now, here are the main numbers for February—a bit lower than expected, easing somewhat, but still high. pic.twitter.com/4xbWBmPDKh
— Jason Furman (@jasonfurman) March 12, 2025
Core CPI, which excludes volatile food and energy prices, rose 0.2% in the month and 3.1% in the past 12 months—both below expectations. “This reading is going to be a little dilutive to this stagflation narrative, and it is going to restore to some extent policy flexibility from the Fed,” said Dave Grecsek, managing director of investment strategy and research at Aspiriant Wealth Management.
“If this inflation number were 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.”
In the backdrop of the stock market, President Donald Trump’s steel and aluminum tariffs took effect on Wednesday, leading Canada to announce it would impose tariffs on more than $20 billion worth of U.S. goods.
#NewsAlert | #US Feb consumer prices rise 2.8% YoY vs est of 2.9% (Agencies) pic.twitter.com/f0HBK5EqK9
— ET NOW (@ETNOWlive) March 12, 2025
February CPI lifts tech stocks
Starting in April, the European Union also pledged to introduce tariffs on 26 billion euros, or $28.33 billion, worth of U.S. imports.
Stocks have been under pressure as traders fear the escalating tensions could trigger a U.S. recession. Part of the reason for the recent sell-off has been concern that Trump’s volatile trade policy would raise inflation and slow growth, otherwise known as stagflation. This week alone, the Dow, S&P 500, and Nasdaq have dropped roughly 3%.
The S&P 500 briefly dipped into correction territory on Tuesday, down 10% from a record set in February. Over the past month, the S&P 500 has lost more than 7%, while the Dow and Nasdaq have shed 6.8% and 10.2%, respectively. “We’re not surprised the market’s pulled down.
U.S. equity markets have been exceptionally strong over the last two years. It’s right to expect a correction,” Grecsek added. But I think once we get through this — we’re in the very early events of these key fiscal policy changes — there’s better news to come.
Image Credits: Photo by Ishant Mishra on Unsplash
