U.S. Stocks Open Higher Despite Renewed Inflation Concerns
Headline
U.S. stocks opened with modest gains on Thursday, attempting to shrug off renewed concerns about inflation and the potential impact of President Donald Trump’s announcement of reciprocal tariffs.
Inflation Data
The producer price index, a measure of wholesale inflation, rose more than expected in January, according to the government’s report released Thursday morning. However, the core rate, which excludes energy and food, was in line with economists’ forecasts.
The PPI report follows the release of a higher-than-expected consumer inflation report on Wednesday. These reports have led economists to lower their expectations for Federal Reserve rate cuts this year, with many now predicting only one or none.
Fed Outlook
"The report was hot, but probably lifted by temporary factors and residual seasonality," said Bill Adams, chief economist at Comerica Bank. "It doesn’t tell the Fed much new. They are on hold near-term, and are likely though not assured to make a single rate cut in 2025 if prices with lots of momentum like housing and residential rents continue to cool and offset upward pressures on inflation from post-election changes to economic policy."
Tariffs
President Trump is expected to announce reciprocal tariffs on Thursday before his meeting with Indian Prime Minister Narendra Modi. These tariffs would add to the 25% tariff on steel and aluminum imports that Trump enacted earlier this week.
Reuters reported that Modi plans to avoid a trade war with the U.S. by preemptively cutting tariffs ahead of his meeting with Trump.
Company News
Despite the macro headwinds, company news continues to drive individual stock movements.
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Bitcoin: Prices fell slightly despite a string of supportive news. Trading platform Robinhood reported strong quarterly performance, partly due to $358 million in crypto-based revenues. Fed Chair Jerome Powell also indicated that the Fed does not plan to hinder crypto banking and is granting banks permission to serve cryptocurrency customers. Coinbase, a digital currency exchange, is set to report earnings later Thursday.
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Other early movers: Tesla gained 1.5%, Apple rose 0.5%, and Amazon declined 0.3%.
Market Performance
At 9:40 a.m. ET, the broad S&P 500 index inched up 0.049%, or 2.97 points, to 6,054.94. The blue-chip Dow Jones Industrial Average gained 0.11%, or 47.56 points, to 44,416.12. The tech-heavy Nasdaq Composite rose 0.18%, or 35.53 points, to 19,685.48. The benchmark 10-year yield dipped to 4.55%.
Conclusion
U.S. stocks opened higher on Thursday, balancing concerns about inflation and tariffs with supportive company news. While the Fed is expected to pause rate cuts in the near term, the outlook for the economy remains uncertain amid ongoing trade tensions and geopolitical risks. Investors will continue to monitor economic data and corporate earnings to assess the impact on the markets.
