Tamer-Than-Expected Inflation Data May Spark Early Rally On Wall Street

The major U.S. index futures are currently pointing to a sharply higher open on Wednesday, with stocks likely to move to the upside after ending the previous session off their worst levels but still mostly lower.

The futures advanced following the release of a closely watched Labor Department report showing consumer prices in the U.S. increased by slightly less than expected in the month of February.

The Labor Department said its consumer price index crept up by 0.2 percent in February after climbing by 0.5 percent in January. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, the core consumer price index also rose by 0.2 percent in February following a 0.4 percent increase in January. Core prices were also expected to climb by 0.3 percent.

The report also said the annual rate of consumer price growth slowed to 2.8 percent in February from 3.0 percent in January. Economists had expected the pace of price growth to edge down to 2.9 percent.

The annual rate of core consumer price growth also slowed to 3.1 percent in February from 3.3 percent in January. Core price growth was expected to dip to 3.2 percent.

The tamer-than-expected inflation may lead to optimism about the Federal Reserve resuming interest rate cuts in the near future.

Positive sentiment may also be generated in reaction to news Ukraine has agreed to a U.S. proposal for an “immediate, interim 30-day ceasefire” with Russia

However, traders may be somewhat reluctant to get back into the markets amid lingering concerns about the impact of new trade policies.

With new U.S. steel and aluminum imports taking effect today, the European Union said it would impose counter tariffs on 26 billion euros ($28 billion) worth of U.S. goods beginning next month.

U.S. stocks closed on a negative note on Tuesday after a highly volatile session. The major averages all closed in the red despite a recovery attempt past mid afternoon.

Worries about the global economic outlook and fears of a possible recession in the U.S. due to the trade war hurt investor sentiment.

The Dow settled lower by 478.23 points or 1.1 percent at 41,433.48 after hitting a low of 41,175.37 and a high of 41,868.27 in the session.

The S&P 500 ended down 42.49 points or 0.8 percent, at 5,572.07, while the Nasdaq settled lower by 32.23 points or 0.2 percent, at 17,436.10. The Nasdaq climbed to 17,687.40 in the final hour, rallying from a low of 17,238.24.

U.S. President Donald Trump said that he was reconsidering plans to double tariffs on Canadian steel and aluminum to 50 percent.

Canada, which had earlier said it would impose tariffs on electricity exports to the U.S., agreed to suspend the 25 percent hike after agreeing to meet on Thursday to discuss a pathway to renew the new North American trade agreement.

Meanwhile, a senior White House official has said the higher tariff on Canadian steel and aluminum imports into the U.S. will not become effective tomorrow.

The change in stance resulted in a recovery in the final hour, but the market still ended on a weak note.

Delta Air Line shares dropped more than 7 percent following a profit warning by the company. American Airlines ended more than 8 percent down.

Verizon, Moderna, ResMed, Texas Instruments, IBM, Apple, Oracle and Chevron also declined sharply.

Southwest Airlines soared 8 percent after the airline said it would launch a new basis fare tire.

Tesla climbed sharply, gaining more than 3 percent, Boeing, Netflix, Micron Technology, Salesforce, Wells Fargo and Amazon also closed notably higher.

In economic news, a report released by the Labor Department showed job openings in the U.S. increased by more than expected in the month of January.

The Labor Department said job openings climbed to 7.74 million in January from a downwardly revised 7.51 million in December.

Economists had expected jobless claims to inch up to 7.63 million from the 7.60 million originally reported for the previous month.

Commodity, Currency Markets

Crude oil futures are climbing $0.85 to $67.10 a barrel after rising $0.22 to $66.25 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,918.90, down $2 compared to the previous session’s close of $2,920.90. On Tuesday, gold jumped $21.50.

On the currency front, the U.S. dollar is trading at 148.87 yen compared to the 147.78 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0886 compared to yesterday’s $1.0919.

Asia

Asian stocks ended mostly lower on Wednesday despite U.S. President Donald Trump downplaying fears of a recession and Ukraine endorsing a U.S. proposal for a 30-day ceasefire with Russia.

Tariff uncertainties kept investors on edge as Trump’s increased tariffs on all U.S. steel and aluminum imports took effect and the European Union said it would impose counter tariffs on 26 billion euros ($28 billion) worth of U.S. goods from next month.

Meanwhile, Trump reversed course on a pledge to double tariffs on steel and aluminum from Canada to 50 percent, minutes after the Canadian province of Ontario backed off its plans for a 25 percent surcharge on electricity.

The dollar weakened against its major peers ahead of the release of a key U.S. consumer price inflation reading later in the day. Gold was marginally lower, while oil prices edged higher on dollar weakness.

China’s Shanghai Composite Index slipped 0.2 percent to 3,371.92 after a choppy session. Hong Kong’s Hang Seng Index fell 0.8 percent to 23,600.31, extending declines for a fourth day.

Japanese shares ended flat after a choppy session as Bank of Japan Governor Kazuo Ueda said recent increases in bond yields were a natural reflection of market expectations of future interest rate hikes.

Additionally, Japan’s annual wholesale inflation hit 4.0 percent in February, data showed on Wednesday, keeping BoJ rate-hike bets alive.

The Nikkei 225 Index finished marginally higher at 36,819.09, while the broader Topix Index jumped 0.9 percent to close at 2,694.91.

Nissan Motor shares rose 0.6 percent after CEO Makoto Uchida announced his resignation, paving the way for Ivan Espinosa to take over on April 1.

Seoul shares rallied, with the Kospi surging 1.5 percent to 2,574.82, led by semiconductor and battery stocks. LG Energy Solution and Samsung SDI both rose around 2 percent.

Australian markets tumbled as U.S. tariffs on steel and aluminum imports came into effect, with no exemptions for Australia.

Prime Minister Anthony Albanese has called the decision by the U.S. “unprovoked, unfriendly and entirely unjustified” but said he won’t impose retaliatory tariffs on the U.S.

The benchmark S&P/ASX 200 Index tumbled 1.3 percent to 7,786.20, hitting a new six-month low. The broader All Ordinaries Index slumped 1.2 percent to 8,002.60.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index dove 1.3 percent to 12,249.55.

Europe

European stocks have advanced on Wednesday after Ukraine signaled its readiness to accept a U.S. proposal for an “immediate, interim 30-day ceasefire” with Russia, and the European Union announced retaliatory tariffs on U.S. imports of steel and aluminum.

“A while ago, Ukraine has agreed to the ceasefire. Now we go to Russia and hopefully President Putin will agree to it also,” U.S. President Donald Trump said soon after the Jeddah announcement.

The pan European STOXX 600 Index has jumped 1.2 percent after four days of declines amid fears about U.S. trade policies and uncertainties related to Germany’s fiscal stimulus package.

The German DAX Index is up by 1.6 percent, the French CAC 40 Index is up by 1.3 percent and the U.K.’s FTSE 100 Index is up by 0.6 percent.

Puma SE shares have slumped. The German sportswear group gave a cautious outlook for the 2025 fiscal year, citing global trade tariffs and currency volatility.

Zara owner Inditex has also moved sharply lower after reporting a slow start to its first quarter sales.

Danish biotech company Zealand Pharma has soared after a collaboration deal with Swiss pharmaceutical firm Roche.

U.S. Economic News

A report released by the Labor Department on Wednesday showed consumer prices in the U.S. increased by slightly less than expected in the month of February.

The Labor Department said its consumer price index crept up by 0.2 percent in February after climbing by 0.5 percent in January. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, the core consumer price index also rose by 0.2 percent in February following a 0.4 percent increase in January. Core prices were also expected to climb by 0.3 percent.

The report also said the annual rate of consumer price growth slowed to 2.8 percent in February from 3.0 percent in January. Economists had expected the pace of price growth to edge down to 2.9 percent.

The annual rate of core consumer price growth also slowed to 3.1 percent in February from 3.3 percent in January. Core price growth was expected to dip to 3.2 percent.

At 10:30 am ET, the Energy Information Administration is due to release its report on oil inventories in the week ended March 7th. Crude oil inventories are expected to increase by 2.1 million barrels after climbing by 3.6 million barrels in the previous week.

The Treasury Department is scheduled to announce the results of this month’s auction of $39 billion worth of ten-year notes at 1 pm ET.