U.S. stocks began the day positively as investors expressed relief following the latest inflation report, which aligned with economists’ expectations. The report indicated a modest increase in the personal consumption expenditures (PCE) prices paid index, providing a contrast to previous inflation concerns.
Market Overview
The personal consumption expenditures (PCE) prices paid index, the Federal Reserve’s preferred measure of inflation, increased by 0.3% for January, resulting in a 2.5% rise year-over-year. Core PCE, which excludes the more volatile food and energy prices, also recorded a 0.3% monthly increase and a 2.6% annual rise. These results offered a welcome contrast to January’s consumer price index (CPI), which had surged to a seven-month high, raising concerns about a potential reversal in price trends before reaching the Fed’s 2% inflation target.
By 9:53 a.m. ET, the S&P 500 index had risen by 0.13%, or 7.73 points, to 5,869.30, while the Dow Jones Industrial Average increased by 0.30%, or 128.03 points, to 43,367.53. In contrast, the tech-heavy Nasdaq Composite fell by 0.16%, or 29.47 points, to 18,514.95. The benchmark 10-year Treasury yield decreased to 4.239%. Despite the positive opening, all three major stock indexes are on track for a losing month, as investor concerns grow over President Trump’s tariff plans, which could spark trade wars and reignite inflationary pressures.
Investor Concerns
Investor optimism is being dampened by worries about the potential economic impact of new tariffs introduced by the Trump administration. Following the announcement of a 10% tariff on Chinese goods set to take effect on March 4, China has promised to retaliate, escalating the trade conflict. Additionally, Trump has indicated that a 25% tax on European Union products will also be implemented on the same day, further increasing investor anxiety.
The Nasdaq has seen a significant decline, dropping approximately 6% in February, with a 5% decrease occurring just this week. This positions the index for its worst month since September 2023. Meanwhile, the S&P 500 is on track for its largest weekly decline since September 2024 and its most significant monthly drop since April 2024. These trends reflect a broader unease among investors regarding the potential consequences of ongoing trade tensions and their effects on economic growth.
Corporate News
In corporate news, Autodesk announced plans to reduce its workforce by 9% and cut back on facilities, leading to a stock decline of over 2.5%. Similarly, HP revealed plans to lay off between 1,000 to 2,000 employees due to weak fourth-quarter results and a challenging outlook for the first quarter. The anticipated tariffs are expected to further impact HP’s quarterly performance, resulting in a stock drop of more than 7%.
On a more positive note, Elastic reported better-than-expected results for its fiscal third quarter, with shares rising nearly 14%. In contrast, Redfin’s loss per share was worse than analysts’ forecasts, causing its stock to fall approximately 12.5%. Rocket Lab’s shares dropped by 5.75% after the company issued a pessimistic outlook, while Dell’s stock decreased by 3.69% following a forecast indicating a decline in its adjusted gross margin rate for fiscal year 2026, attributed to rising costs related to artificial intelligence server production.
Cryptocurrency Market Update
In the cryptocurrency market, the Securities and Exchange Commission (SEC) provided guidance indicating that most meme coins are not classified as securities under U.S. federal law, comparing them to collectibles. This could allow for the listing of more meme coins by exchange operators without the risk of regulatory enforcement, suggesting a potentially lighter regulatory approach from the Trump administration regarding the crypto market.
Despite this favorable regulatory news, the cryptocurrency market continues to face difficulties. Bitcoin has fallen to a three-month low, reversing gains made after Trump’s presidential victory, and was last reported down 2.95% at $82,499.77. Additionally, major crypto exchange Coinbase saw its shares decline nearly 1%, while Robinhood experienced a loss of 1.24%. The ongoing downtrend in the crypto sector highlights the volatility and uncertainty that continue to affect digital assets, even amid positive regulatory developments.
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