Wall Street is happier today after several tough weeks.
After prices increased less than anticipated last month, the February inflation figure gave stocks an unexpected but welcome boost in stock values this morning.
The Consumer Price Index showed prices increased 2.8% year over year — still above the Fed’s 2% target but a decline from the 3% annual increase recorded in January. The CPI was expected to be 2.9% in the year ended February by economists.
In February, the consumer price index was up by 0.2% compared to January, which had risen 0.5%. It was just below the projections of a 0.3% increase last month. The Core CPI, which excludes volatile energy and food prices, rose by 3.1% last month. This was the lowest annual increase for almost four years.
The housing sector, which has historically been one of those stubbornly persistent components in the inflation print, plays a major role in driving down the rate of inflation. The reduction in housing costs has contributed significantly to the inflation slowdown over the last two years.
The cost of non-housing has risen less steadily. This sector is likely to see tariffs impact goods, even though Core Inflation has slowed for the moment. The cost of food and energy is also likely to increase, particularly with Trump’s tariff plans on steel and aluminium, experts estimating that OCTG prices will rise by 15 percent annually.
US stocks rose on Wednesday, boosted by the latest inflation data. The S&P 500 gained as much as 0.8% while the Nasdaq Composite surged almost 1.5% early in the session. As of 2 pm ET, they had traded 0.4% higher and 0.9% more respectively.
Markets are weighed down by fears of an escalating global trade war. Our estimate is that the “tariff trade” The US equity market is dominated by inflation, even though a short-term increase in the number of positive inflation readings may provide some relief.
The Fed has been comfortable with its current interest rate reduction pause. Powell stated last week the economy has been doing very well. “fine.”
“It doesn’t need us to do anything,” He added.
On the tariff front, the latest is another round of retaliation against the US. Canada levied a 25% tariff on US steel, and the EU announced extra duties on products such as denims, poultry, bourbons and other items.
The companies have two choices: Either accept the losses or raise prices. Karoline leavitt says that the second option is not an option. We have written about the US companies’ increased inventories in the beginning of the new year. If companies choose to increase prices, it may take time for consumers to notice the higher price.
Donald Trump warned Americans about “short-term pain” But has not yet revealed how high is the pain threshold of this administration. Cabinet members have tried damage control before, which I would describe as a poor attempt. But today’s approach was completely different.
Howard Lutnick said today that tariffs have no place in the world of commerce. “worth it” Even if it plunges the US into recession. Their pain threshold must be pretty high. It sounds like an “Trump put” It is not possible.
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