U.S. stocks fluctuated wildly Wednesday as investors weighed the latest trade skirmish with Canada and a solid inflation report.
Consumer inflation slowed a little in February, after January’s surprising hot reading. The consumer-price index rose 2.8% in the past 12 months, slightly undershooting forecasts, or 0.2% from a month earlier, also below expectations.
The report was the first monthly inflation reading to fall fully under the new Trump administration, though it doesn’t capture the impact of the latest tariffs.
Inflation concerns have intensified, as President Trump’s import levies risk fueling price pressures while also weighing on growth. Resurgent inflation would make it harder for the Federal Reserve to make further cuts to interest rates, even if the economy is slowing.
Some investors are growing apprehensive that prolonged uncertainty over tariffs could hinder growth and tip the U.S. economy into a recession.
“Right now, the concern on growth is impacting the markets more than inflation,” said Adrian Helfert, chief investment officer of Westwood’s alternative and multi-asset portfolios. “We could see growth rates drop down to the recessionary territory.”
Stocks were mostly higher in a volatile session after the CPI report. The Dow industrials swung between gains and losses, while the Nasdaq Composite was up by more than 1%. The S&P 500 rose slightly, reversing earlier losses.
Wall Street’s fear gauge edged down. The Cboe Volatility Index, or VIX, stood at around 25.
Treasury yields rose to about 4.3%. The benchmark 10-year yield settled above 4.28% Tuesday.
European stocks mostly gained, despite the tariff escalation. The DAX index in Germany rose more than 1%.
The U.S. dollar strengthened slightly, after the WSJ Dollar Index settled Tuesday at the lowest level since November. The euro was little changed, at $1.09, while the Canadian dollar rose modestly.
The Bank of Canada cut its main interest rate by a quarter point to help offset weaker consumer spending and trade uncertainty. “We’re now facing a new crisis,” Bank of Canada Gov. Tiff Mecklem said.
