Market Recap: S&P 500 and Nasdaq Rebound Amid Inflation Data and Trade Tensions

Market Performance: A Mixed Bag

On Wednesday, March 12, 2025, the U.S. stock market experienced a mixed session, with technology stocks leading a rebound while concerns over trade tensions lingered. The S&P 500 (SPX) closed up 0.26% at 5,586.81, while the tech-heavy Nasdaq Composite (IXIC) gained 0.90% to end at 17,594.35. However, the Dow Jones Industrial Average (DJI) fell 0.48% to 41,235.22, reflecting the ongoing uncertainty in the market.

Inflation Data Provides Some Relief

The day’s trading was significantly influenced by the release of February’s Consumer Price Index (CPI) data. The CPI, a key measure of inflation, rose 2.8% year-over-year, lower than the expected 2.9%. This cooler-than-anticipated inflation reading provided some relief to investors, as it suggests that the Federal Reserve might have more flexibility in its monetary policy decisions.

Peter Cardillo, chief market economist at Spartan Capital Securities, commented, “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.”

Trade Tensions Cast a Shadow

Despite the positive inflation data, market sentiment remained cautious due to escalating trade tensions. President Trump’s 25% tariffs on steel and aluminum imports took effect, prompting swift retaliation from Canada and the European Union. This development has raised concerns about potential economic implications and the possibility of a broader trade war.

Sector Performance and Notable Stocks

Technology stocks (SPLRCT) showed resilience, rebounding with a 1.4% rise after being among the top decliners so far in 2025. Notable movements included:

1. Intel Corporation (INTC): Jumped 3% following reports that Taiwan Semiconductor Manufacturing Company (TSMC) had proposed a joint venture to U.S. chipmakers to operate Intel’s foundry division.

2. NVIDIA Corporation (NVDA) and Tesla Inc (TSLA): Both stocks gained in pre-market trading, contributing to the Nasdaq’s strong performance.

3. Ford Motor Company (F) and General Motors Company (GM): Lost 1.5% and 1.3% respectively, reflecting concerns over the impact of tariffs on the automotive industry.

4. Cleveland-Cliffs Inc. (CLF) and Alcoa Corporation (AA): Bucked the downward trend in materials, rising 8% and 2.5% respectively, as steel and aluminum stocks benefited from the new tariffs.

5. PepsiCo Inc. (PEP): Fell 3% following a downgrade from brokerage Jefferies.

Upcoming Market Events

Investors are now turning their attention to several key events that could impact market direction:

1. Federal Reserve Meeting: The U.S. central bank’s March meeting is scheduled for next Tuesday and Wednesday. While the Fed is expected to maintain current borrowing rates, traders are pricing in a 25-basis-point interest rate cut in June.

2. Earnings Reports: With the Q1 earnings season approaching, investors will be closely watching for guidance on how companies are navigating the current economic landscape.

3. Economic Data Releases: Upcoming reports on retail sales, industrial production, and consumer sentiment will provide further insights into the health of the U.S. economy.

Market Outlook

The market remains in a precarious position, with the S&P 500 narrowly avoiding a 10% correction from its February high. Analysts at major financial institutions, including Goldman Sachs and J.P. Morgan, have expressed caution, with the latter seeing higher chances of a recession.

As trade tensions continue to simmer and economic uncertainty persists, investors are advised to remain vigilant. The interplay between inflation data, Fed policy, and global trade developments will likely continue to drive market sentiment in the coming weeks.

In conclusion, while today’s session provided some relief for tech stocks and offered encouraging inflation data, the broader market remains cautious. Investors will be closely monitoring upcoming events and economic indicators for further direction in this volatile environment.