Market Recap – Wednesday, March 12, 2025
Stocks Rebound as CPI Cools, But Tariff Uncertainty Looms; Moderate Gains After Recent Weakness
US equities closed higher on Wednesday, with the S&P 500 (+0.49%) and Nasdaq (+1.22%) bouncing after recent declines, though the Dow (+0.20%) and Russell 2000 (+0.14%) posted more modest gains. The S&P remains nearly 9% below its February all-time high as investors remain cautious about economic growth and tariff impacts. Big Tech led the recovery, with Nvidia (NVDA) and Tesla (TSLA) outperforming, though Apple (AAPL) continued to lag. Other strong sectors included semiconductors, software, energy, credit cards, and banks, while airlines, food/beverage, hospitals, and managed care stocks lagged.
Treasuries weakened with some curve flattening, while the dollar edged up (+0.1%). Gold gained (+0.9%), and WTI crude rebounded (+2.2%). Bitcoin (-0.6%) saw a slight dip following yesterday’s recovery.
CPI Report Offers Relief, But Growth and Trade Uncertainty Persist
Investors found some relief in February’s CPI report, which showed inflation cooling faster than expected. Core CPI rose just 0.2% m/m (vs. 0.3% expected), bringing the annual rate down to 3.1%. Headline CPI also increased 0.2% m/m and 2.8% y/y, both below forecasts. Shelter costs remained elevated but showed signs of slowing, while airline fares, used vehicles, and car insurance prices all decelerated.
Despite the encouraging inflation data, Fed rate expectations remained unchanged as markets still expect no cut at next week’s FOMC meeting. However, stagflation concerns eased slightly, allowing for today’s stock market bounce.
Tariff Tensions Escalate With Retaliation From EU and Canada
Markets continue to grapple with the impact of Trump's aggressive trade policies as his 25% tariffs on steel and aluminum imports took effect overnight. Commerce Secretary Lutnick hinted at adding copper to the tariff list, reinforcing the administration's protectionist stance.
In response, Canada and the EU swiftly imposed counter-tariffs, with the EU targeting $28B in US industrial and agricultural goods, while Canada announced 25% tariffs on $21B of US goods. China also summoned Walmart (WMT) executives over reports that the retailer asked suppliers to absorb higher US tariff costs.
Despite the trade tensions, Trump reiterated his commitment to reciprocal tariffs and signaled little room for flexibility ahead of the expected April 2 tariff announcements. These developments have fueled concerns about economic headwinds, with Goldman Sachs cutting its S&P 500 year-end target to 6,200 from 6,500 and JPMorgan raising its 2025 US recession probability to 40%.
Notable Stock Movers
Gainers:
Sprinklr (CXM) +16.6% – Strong Q4 earnings and revenue; guidance also beat expectations.
Summit Therapeutics (SMMT) +7.6% – Positive analyst coverage citing strength in its lung cancer drug study.
Casey's General Stores (CASY) +6.2% – Q3 beat with revenue strength across all segments; EBITDA guidance raised.
Rubrik (RBRK) +6.1% – Upgraded on valuation and strong subscription growth outlook.
Intel (INTC) +4.6% – Reports TSMC seeking joint venture partners to operate Intel's factories.
Decliners:
Vivid Seats (SEAT) -23.1% – Q4 beat, but FY25 guidance disappointed due to rising competition.
SunRun (RUN) -5.2% – Downgraded on continued weakness in the residential solar market.
PepsiCo (PEP) -2.7% – Analyst downgrade citing sluggish Frito-Lay performance and soft US beverage trends.
Verizon (VZ) -1.9% – Downgraded after a weak industry outlook at a recent investor conference.
Here’s Our Take
While today’s inflation data was a welcome development, markets remain on edge as tariff volatility and economic uncertainty overshadow positive macro reports. Cooling CPI numbers suggest inflation is easing, but concerns about trade tensions and slowing global growth continue to weigh on investor sentiment.
For investors, this remains a high-risk, high-opportunity market:
Focus on quality stocks with resilient earnings and pricing power.
Defensive sectors (energy, healthcare, and utilities) may provide stability amid uncertainty.
Tech and semiconductors remain volatile but could present tactical buying opportunities on pullbacks.
Monitor tariff developments closely—more clarity (or concessions) could help restore confidence.
With the Fed still in wait-and-see mode and trade risks rising, volatility is likely to persist. Smart positioning and disciplined portfolio management will be key in navigating the current market landscape