Wall Street Rebounds As Cooling Inflation Draws Tech Dip Buyers: What's Driving Markets Wednesday?

Traders found relief in a cooler-than-expected inflation report, driving tech-heavy indices to a rebound on Wednesday despite ongoing trade tensions.

In February, the Consumer Price Index declined from 3% year-over-year to 2.8%, beating analysts' expectations of a slowdown to 2.9%. Core inflation also dropped more than anticipated, easing from 3.3% to 3.1%.

The decline was supported by contractions in key categories, with gasoline prices falling 1% month-over-month and transportation costs down 0.8%. Airline fares saw a sharper drop, contracting by 4%.

The softer inflation data strengthened expectations for Federal Reserve rate cuts, with traders now assigning nearly an 80% probability of a reduction by June, according to CME's FedWatch Tool.

While inflation relief fueled optimism, trade concerns lingered. The U.S. imposed 25% tariffs on steel and aluminum in April, prompting swift retaliation. In response, the EU introduced tariffs on €26 billion worth of U.S. goods, while Canada imposed additional levies on $29.8 billion, supplementing previous penalties.

The S&P 500 rose 0.6%, while the Nasdaq 100 jumped 1.2%, aiming to break a two-session losing streak. In contrast, the Dow remained flat.

Tech stocks led the rebound from their recent sell-off, with Palantir Technologies Inc. PLTR, Nvidia Corp. NVDA, and Tesla Inc. TSLA rallying 6.2%, 6.4%, and 7.5%, respectively.

Treasury yields remained flat on the day, while gold climbed 0.8% to $2,940 per ounce, now just 0.5% below its all-time high.

Bitcoin BTC/USD edged down 0.8%.

Wednesday’s Performance In Major US Indices

Major Indices	Price	%
Nasdaq 100	19,625.52	1.3%
S&P 500	5,606.41	0.6%
Russell 2000	2,027.44	0.3%
Dow Jones	41,428.96	0.0%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY rose 0.7% to $560.14.
• The SPDR Dow Jones Industrial Average DIA flattened at $414.65.
• The tech-heavy Invesco QQQ Trust Series QQQ rose 1.4% to $478.01.
• The iShares Russell 2000 ETF IWM inched 0.2% higher to 201.20.
• The Technology Select Sector SPDR Fund XLK outperformed, up 1.8%; the Consumer Staples Select Sector SPDR Fund XLP was the worst sector performer, down 1.9%.

Wednesday’s Stock Movers

• American Airlines Group Inc. AAL tumbled 3.7%, eyeing its tenth negative session over the past eleven as the company issued a negative outlook for the quarter. Meanwhile, Bank of America lowered the stock price target from $19 to $13.
• United Airlines Holdings Inc. UAL dropped 4.2% after a wave of price target cuts from major banks. Barclays lowered its target from $150 to $140, BofA trimmed it from $125 to $110, and TD Cowen reduced its estimate from $165 to $150.
• Intel Corp. INTC surged 4.6% after a Reuters report revealed that Taiwan Semiconductor Manufacturing Company Ltd. TSM had approached Nvidia, Advanced Micro Devices Inc. AMD, and Broadcom Inc. about investing in a joint venture to operate Intel’s factories.

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