The S&P 500 and the Nasdaq closed in positive territory, the latter enjoying a muscular boost from tech and tech-adjacent momentum stocks. “(Equities) are higher on the expectation that the Fed could consider additional rate cuts," said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois. "But CPI is looking backward - it's last month's data - and we still don't have a good sense of what the tariffs may do to inflation." "The tariff discussion continues to cloud confidence in investors," Nolte added. The Dow Jones Industrial Average fell 0.20% to 41,350.93, the S&P 500 gained 0.49% to 5,599.30 and the Nasdaq Composite added 1.22% to 17,648.45.
Treasury yields rose on the potentially inflationary impact of a global trade war, offsetting optimism over slowing consumer price gains in February. Underlying components of the data that feed through to personal consumption expenditures, the Federal Reserve’s preferred inflation measure, were higher than expected. “This is the last reading not impacted by tariff distortions, so to some extent the market's a little bit hesitant to over react to a better print,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York. “The transmission to PCE is actually a little bit stronger,” he added. Two-year notes fell 3/32 to yield 3.9907%. 30- year bonds slipped 16/32, yielding 4.6335%. Meanwhile, the Treasury Department sold $39 billion in 10-year notes at a high yield of 4.310%. The bid-to-cover ratio was 2.59.
The dollar edged higher against major currencies including the yen and the euro as data showed a slowdown in inflation although simmering trade tensions will continue to weigh on markets. A trade brinkmanship between the U.S. and its trading partners, spurred by President Donald Trump's unpredictable announcements on tariffs, has spread uncertainty among investors. "There was a brief moment of a relief because CPI came in lower than expected and that created some currency volatility but I think the dollar direction is beginning to get a little worn out because of bigger trends and there's so much headline risk with Ukraine-Russia war or tariffs," said John Velis, Americas macro strategist at BNY. The dollar index was up 0.27% at 103.57. Euro fell 0.24% to $1.0892. Against the Japanese yen, the greenback rose 0.35% to 148.29 yen.
Oil prices jumped, as U.S. government data showed tighter-than-expected oil and fuel inventories, though investors kept an eye on mounting fears of a U.S. economic slowdown and the impact of tariffs on global economic growth. Brent futures were 2.03% higher at $70.97 a barrel. U.S. West Texas Intermediate crude futures gained 2.17% to $67.69 a barrel. U.S. gasoline inventories fell by 5.7 million barrels, versus expectations for a 1.9 million-barrel draw, while distillate stocks also dropped by more than expected. "This week, the oil build was smaller than expected and gasoline and diesel draws were larger than expected," said Josh Young, Chief Investment Officer, Bison Interests. "This evidences stronger demand and could see oil prices rise as a result."
Safe-haven gold rose, aided by tariff uncertainty and a cooler inflation report that keep bets for a U.S. rate cut intact. Spot gold was up 0.58% at $2,933.03 an ounce. U.S. gold futures were 0.65% higher at $2,940.00 per ounce. "The concern continues to be that we're going to have tariffs and that will ultimately potentially cause some inflation," said Bart Melek, head of commodity strategies at TD Securities. The U.S. Producer Price Index (PPI) and weekly jobless claims data due on Thursday are the next data sets on investors' radar.
