Wednesday's whipsaw session came courtesy of the latest inflation data and tariff news. Stocks were mostly higher by the close as market participants swooped in to buy the dip.
The main indexes opened higher across the board today, with sentiment boosted by a cooler-than-expected inflation update. According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) rose 0.2% month over month in February, slower than January's 0.3% rise and economists' projections for a 0.3% increase. Year over year, February CPI was up 2.8%.
Core CPI, which excludes volatile food and energy prices and is seen as a better measure of underlying inflation trends, was up 0.2% from January to February and 3.1% year over year. Both figures were lower than what was seen the month prior and arrived below economists' forecasts.
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"The better-than-expected inflation print will help reduce the recent political noise and calm markets," says Eugenio Alemán, chief economist at Raymond James. "It also reinforces our view that the disinflationary process is alive and well."
Alemán adds that there will likely be "some inflationary impact from tariffs," but in the grand scheme of things, "the disinflationary trend remains intact." And this, he says, is good news for the Fed.
Retaliatory tariffs temporarily weigh on stocks
Still, stocks had slumped to their session lows by mid-morning after the European Union and Canada said they will impose retaliatory tariffs on U.S. imports to counter the 25% tax the Trump administration imposed on steel and aluminum tariffs Wednesday.
The EU, for one, announced its plans for 50% tariffs on roughly $28 billion worth of U.S. products, including whiskey and motorcycles. And Canada said it will levy a 25% tariff on $20 billion worth of U.S. imports such as steel, aluminum and computers.
When asked if he plans to respond, President Donald Trump answered "of course."
At the close, the tech-heavy Nasdaq Composite was up 1.2% at 17,648 and the broader S&P 500 was 0.5% higher at 5,599. The Dow Jones Industrial Average, meanwhile, was down 0.2% at 41,350.
Beaten-down stocks bounce
The Nasdaq's outperformance came as several beaten-down large- and mega-cap stocks bounced. Nvidia (NVDA), for instance, surged 6.4%, while Tesla (TSLA) gained 7.6%. The pair was down 19% and 43% for the year to date heading into Wednesday's session.
And Palantir Technologies (PLTR), which had plunged 22% in the past three weeks, jumped 7.2% after the data analytics firm said it will unveil a slate of new customers at its sixth annual AIPCon, which will be live-streamed tomorrow, March 13.
The announcement "suggests that the company's commercial momentum has continued," says William Blair analyst Louie DiPalma, who adds that the featured logos "span a wide range of industries."
Verizon stock drops on downgrade
Several notable blue chip stocks put pressure on the Dow today, including Verizon Communications (VZ). The telecom tumbled 2.0% after Wolfe Research analysts downgraded it to Peer Perform from Outperform, the equivalents of Hold and Buy, respectively.
"While we remain constructive on Verizon's opportunity to regain Consumer postpaid phone subscribers, capture the fixed wireless access opportunity, and sell perks into its base, we are concerned about the rising cost to gain new customers via phone subsidies and upgrades," the analysts wrote.
Verizon is now down 7% for the week to date after its chief revenue officer on Tuesday forecast a "challenging quarter ahead" due to intense competition.
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