The tech-heavy Nasdaq gained 1.2%, while the S&P 500 advanced 0.5%. The Dow Jones recovered from the lows of the day but continued to underperform, ending 80 points lower. At the session’s low, the Dow was down 350 points.
Gains among the tech stocks was led by Nvidia and Tesla, with both gaining over 6% each. Buying was also seen in shares of AMD and Meta. Intel jumped 12% after the appointment of a new CEO. Oversold conditions on the charts also contributed to the bounce.
Inflation for February grew at a slower-than-expected 2.8% compared to expectations of 2.9% year-on-year. Core inflation, which excludes food and energy prices also grew 3.2%, better than the 3.3% estimate.
While the surprise slowdown in consumer prices brought a degree of relief to traders, several voices on Wall Street saw the data as the “calm before the storm” given the uncertainties around the potential impacts of tariffs on the economy.
“For the last three weeks, traders have felt like buying this market is like trying to catch a falling knife,” said Mark Hackett at Nationwide. “But extreme oversold conditions and near-universal pessimism suggest a relief rally is likely.”
The yield on 10-year Treasuries advanced three basis points to 4.31%. The two-year yield, which reflects traders’ expectations for Fed policy, declined as much as four basis points to a session low of 3.90%, before rebounding to as high as 4%. The 10-year yield also whipsawed before rising as high as 4.33%.
A dollar gauge was little changed.
A government report on producer prices due Thursday will offer insights on additional categories that feed directly into the the Fed’s favored inflation gauge, which is due later this month.
Recent market pricing suggests that the Fed will be on near-term hold but then may execute a more rapid rate-cutting cycle after their March meeting, according to Rick Rieder, BlackRock’s chief investment officer of global fixed income and head of the BlackRock Global Allocation Investment Team.
“Our eyes will be keenly focused on the next couple of payroll reports, and very much on immigration’s impact therein, to determine whether the Fed will feel the need to allow for some distance from its inflation objective in order to prevent a more persistent labor deterioration,” he said.
(With Inputs From Agencies.)
