US tariffs trigger retaliation from Canada and the EU, while inflation data eases fears of stagflation
On Wednesday, the Nasdaq Composite rose as a lower-than-expected inflation report alleviated concerns about the US economy, while investors moved back into technology stocks, according to CNBC.
Meanwhile, escalating trade tensions, including new US tariffs on steel and aluminum, continue to weigh on markets.
The tech-heavy Nasdaq Composite gained 1.22 percent, closing at 17,648.45. The S&P 500 also advanced, rising 0.49 percent to end at 5,599.30.
However, the Dow Jones Industrial Average declined by 82.55 points, or 0.2 percent, finishing at 41,350.93.
Despite the technology sector being down more than 3 percent for the week, stocks rebounded on Wednesday, driving the S&P 500 higher.
Nvidia surged 6.4 percent, while AMD climbed more than 4 percent. Meta Platforms gained 2 percent, and Tesla jumped over 7 percent.
The latest US consumer price index (CPI) report showed a 0.2 percent monthly increase, bringing the annual inflation rate to 2.8 percent.
Both figures came in lower than Dow Jones estimates, which had projected 0.3 percent for the month and 2.9 percent for the year.
Core CPI, which excludes food and energy prices, also rose 0.2 percent in March and 3.1 percent over the past 12 months, staying below expectations.
Dave Grecsek, managing director in investment strategy and research at Aspiriant Wealth Management, said the inflation data challenges concerns about stagflation and gives the Federal Reserve more flexibility.
“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,” he said.
Grecsek noted that if inflation had been higher, the Federal Reserve would have faced more pressure, with limited ability to respond to economic weakness.
While US inflation data improved sentiment, global trade tensions continued to weigh on markets.
Trump’s steel and aluminum tariffs took effect on Wednesday, prompting Canada to impose 25 percent retaliatory duties on more than US$20bn worth of US goods.
The European Union also announced counter-tariffs worth US$28.33bn, set to take effect in April.
Traders remain concerned that escalating trade conflicts could push the US into a recession. The ongoing sell-off in markets reflects fears that Trump’s trade policies could drive inflation higher while slowing economic growth, increasing stagflation risks.
Stocks have struggled this week amid trade uncertainty. The Dow, S&P 500, and Nasdaq have each fallen approximately 3 percent.
The S&P 500 briefly dipped into correction territory on Tuesday, dropping 10 percent from its February record high.
Over the past month, the S&P 500 has lost over 7 percent, while the Dow has declined by 6.8 percent. The Nasdaq has dropped the most, shedding 10.2 percent.
Grecsek acknowledged the downturn but suggested that markets were due for a pullback. “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 said.
Despite short-term volatility, he remained optimistic, stating that once investors adjust to the early stages of these fiscal policy changes, “there’s better news to come.”
