U.S. stocks advanced Wednesday as cooler-than-expected inflation data helped stanch a sharp selloff, while the escalation of U.S. President Donald Trump's chaotic, multi-front tariff war kept gains in check.
The S&P 500 and the Nasdaq closed in positive territory, the latter enjoying a muscular boost from tech and tech-adjacent momentum stocks.
The blue-chip Dow waffled between red and green for much of the session but ended modestly lower on the day.
The Labor Department's Consumer Price Index showed consumer prices cooling more than analysts expected, providing reassurance that inflation is headed in the right direction and keeping hopes alive that the U.S. Federal Reserve could cut its key interest rate this year.
"We're seeing a bounce today on the lower-than-expected inflation read and some dip buying," said Greg Bassuk, CEO at AXS Investments in New York. "But Wall Street and Main Street are still looking for direction."
"Investors’ hopefulness about inflation cooling is being mitigated by the ongoing trade-war strife," Bassuk added. "And for that reason, we really expect the uncertainty and volatility to continue here through much of March."
In his latest tariff salvo, Trump imposed 25% duties on imported steel and aluminum, prompting Canada and Europe to respond in kind, ramping up their retaliatory tariffs on U.S. exports.
U.S. equities have come under pressure amid the rising temperature of tit-for-tat tariff disputes between the United States and its trading partners, rattling investors and giving rise to fears that the resulting price jolts could tip the United States, along with Canada and Mexico, into recession.
Goldman Sachs lowered its year-end target for the S&P 500, while J.P. Morgan sees increasing odds of a U.S. recession.
On Monday, the S&P 500 dipped below its 200-day moving average, considered a significant support level, for the first time since November 2023.
On March 6, the tech-heavy Nasdaq dipped more than 10% below its record closing high reached on December 16, confirming it has been in a correction since then.
According to preliminary data, the S&P 500 gained 26.21 points, or 0.47%, to end at 5,598.28 points, while the Nasdaq Composite gained 210.80 points, or 1.21%, to 17,646.89. The Dow Jones Industrial Average fell 88.27 points, or 0.21%, to 41,345.21.
Intel jumped after a report said TSMC had pitched Nvidia, Advanced Micro Devices and Broadcom about taking a stake in a joint venture to operate the U.S. chip company's factories.
PepsiCo fell after brokerage Jefferies downgraded its rating on the stock to "hold" from "buy."
Lawmakers on Capitol Hill continued to wrangle over a stopgap spending bill in an effort to avoid a government shutdown, adding further uncertainties to the mix.