Wall St gains on cooling inflation, eyes tariff fallout

The benchmark S&P 500 and the Nasdaq have risen following data that showed slowing US inflation, although concerns about the economic fallout of President Donald Trump's trade policies persisted.

A Labor Department report showed consumer prices increased less than expected in February, but the improvement is likely to be temporary, given the backdrop of aggressive import tariffs.

"This (CPI) is good news on the inflation front but obviously, with the imposition of tariffs, we still don't know where the real direction of inflation is at this time," said Peter Cardillo, chief market economist at Spartan Capital Securities.

Traders held on to bets that the Federal Reserve will proceed with a 25-basis-point interest-rate cut in June, according to data compiled by LSEG. The central bank is widely expected to maintain current borrowing rates at its meeting next week.

Rate-sensitive banks such as Well Fargo and Goldman Sachs, gained 1.9 per cent and 1.1 per cent, respectively, with growth stocks also rising. Tesla surged 6.6 per cent and Nvidia climbed 5.8 per cent, lifting the broader chips index by 2.7 per cent.

Trump's 25 per cent protectionist tariffs on all steel and aluminum imports kicked in on Wednesday and are likely to include Copper. The US president's trade restrictions drew swift retaliation from Canada and the European Commission.

Companies that integrate steel and aluminum within their supply chains, such as Ford and General Motors, fell 1.7 per cent each, while Honeywell dropped 1.4 per cent and Deere declined 1.5 per cent.

In early trading on Wednesday, the Dow Jones Industrial Average fell 105.04 points, or 0.25 per cent, to 41,328.44, the S&P 500 gained 30.39 points, or 0.55 per cent, to 5,602.46, and the Nasdaq Composite gained 227.53 points, or 1.3 per cent, to 17,663.62.

Technology stocks led sectoral gains with a 1.9 per cent rise, rebounding from sharp declines in the previous two sessions.

Financial markets have been roiled by Trump's unpredictable tariff manoeuvres, with analysts cautioning about potential capital outflows from Wall Street. Concerns are mounting that the new US tariffs could stoke domestic inflation and possibly trigger a recession.

The tech-heavy Nasdaq recently entered correction territory, while the S&P 500 narrowly avoided confirming a 10 per cent drop from its February high in the last session.

The uncertainty has prompted businesses to dial back on investments and revise their forecasts downward. Delta, Kohl's and Walmart are among the latest companies to announce forecast adjustments.

Goldman Sachs became the first brokerage to lower its 2025-end target for the benchmark index, while J.P.Morgan sees an increased chance of the US economy entering a recession.

Intel jumped six per cent after a report said TSMC had pitched Nvidia, Advanced Micro Devices and Broadcom about taking a stake in a joint venture to operate the US chip company's factories.

PepsiCo fell 2.1 per cent after brokerage Jefferies downgraded its rating on the stock.

A debate on the stopgap bill in the US Senate was also in focus.

Advancing issues outnumbered decliners by a 1.31-to-1 ratio on the NYSE, and by a 1.37-to-1 ratio on the Nasdaq.

The S&P 500 posted no new 52-week highs and 11 new lows, while the Nasdaq Composite recorded 13 new highs and 90 new lows.