S&P near record as traders shrug off inflation, focus on Trump tariffs
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Wall Street Powers Ahead Despite Inflation Concerns
The S&P 500 surged 1% on Thursday, coming within just three points of a new all-time high, closing at 6,115.07 against the record 6,118.00. Investors brushed off inflation worries and aggressively bought into the dip, fueling a broad-based rally across U.S. equities. The Nasdaq outperformed with a 1.5% gain, as tech stocks roared back from early-week declines, while the Dow Jones climbed 0.8%, reinforcing the risk-on sentiment sweeping through markets.
Inflationary Pressures Mount, but the Market Ignores the Fed’s Caution
Despite stronger-than-expected inflation data, investors remain unfazed. The Consumer Price Index (CPI) for January hit 3.0% year-over-year, surpassing estimates, while wholesale inflation (PPI) also surprised to the upside at 0.4% month-over-month versus the expected 0.3%. Ordinarily, these figures would trigger concerns that the Federal Reserve may delay rate cuts, but traders dismissed the data, opting instead to focus on earnings strength and AI-driven momentum. The Fed’s reluctance to pivot toward easing has been largely ignored, as market sentiment remains firmly in “buy the dip” mode.
Trump’s Tariff Maneuver Shakes the Dollar, Boosts Equities
Trump’s tariff plan was expected to introduce immediate trade barriers, but instead, he held back from unveiling specific figures, delegating the responsibility to various federal agencies. The lack of concrete tariff details triggered a 0.8% drop in the U.S. dollar, fueling risk appetite across equity markets. Traders viewed this delay as a temporary reprieve from trade war concerns, allowing stocks to rally without immediate disruption to global supply chains. However, the potential for more aggressive trade policies later in the year remains a key macro risk to watch.
Market Outlook: Is the Rally Sustainable?
The S&P 500’s march toward new record highs signals strong momentum, but inflation concerns haven’t disappeared. If rate expectations shift further toward a prolonged high-rate environment, investors may need to adjust their positioning in rate-sensitive sectors. The Nasdaq’s outperformance suggests renewed AI and tech enthusiasm, which has been a key driver of the latest leg higher. The dollar’s weakness also supports risk assets, making the sustainability of this rally highly dependent on how inflation data evolves in the coming months.
The S&P 500 surged 1% on Thursday, coming within just three points of a new all-time high, closing at 6,115.07 against the record 6,118.00. Investors brushed off inflation worries and aggressively bought into the dip, fueling a broad-based rally across U.S. equities. The Nasdaq outperformed with a 1.5% gain, as tech stocks roared back from early-week declines, while the Dow Jones climbed 0.8%, reinforcing the risk-on sentiment sweeping through markets.
Inflationary Pressures Mount, but the Market Ignores the Fed’s Caution
Despite stronger-than-expected inflation data, investors remain unfazed. The Consumer Price Index (CPI) for January hit 3.0% year-over-year, surpassing estimates, while wholesale inflation (PPI) also surprised to the upside at 0.4% month-over-month versus the expected 0.3%. Ordinarily, these figures would trigger concerns that the Federal Reserve may delay rate cuts, but traders dismissed the data, opting instead to focus on earnings strength and AI-driven momentum. The Fed’s reluctance to pivot toward easing has been largely ignored, as market sentiment remains firmly in “buy the dip” mode.
Trump’s Tariff Maneuver Shakes the Dollar, Boosts Equities
Trump’s tariff plan was expected to introduce immediate trade barriers, but instead, he held back from unveiling specific figures, delegating the responsibility to various federal agencies. The lack of concrete tariff details triggered a 0.8% drop in the U.S. dollar, fueling risk appetite across equity markets. Traders viewed this delay as a temporary reprieve from trade war concerns, allowing stocks to rally without immediate disruption to global supply chains. However, the potential for more aggressive trade policies later in the year remains a key macro risk to watch.
Market Outlook: Is the Rally Sustainable?
The S&P 500’s march toward new record highs signals strong momentum, but inflation concerns haven’t disappeared. If rate expectations shift further toward a prolonged high-rate environment, investors may need to adjust their positioning in rate-sensitive sectors. The Nasdaq’s outperformance suggests renewed AI and tech enthusiasm, which has been a key driver of the latest leg higher. The dollar’s weakness also supports risk assets, making the sustainability of this rally highly dependent on how inflation data evolves in the coming months.