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On Thursday evening Beijing time, U.S. stocks opened lower. The February Producer Price Index (PPI) remained unexpectedly flat, but analysts predict that Trump’s tariffs could push inflation higher in the coming months. Investors are closely monitoring the ongoing tariff war and the risk of a U.S. government shutdown. President Trump has vowed to retaliate against EU countermeasures.
The Dow Jones Industrial Average fell 128.11 points, or 0.31%, to 41,222.82. The Nasdaq Composite dropped 52.84 points, or 0.30%, to 17,595.61. The S&P 500 declined by 11.67 points, or 0.21%, to 5,587.63.
Mixed Performance in Previous Session
On Wednesday, U.S. stocks closed with mixed results. Tech stocks, which had been struggling, saw a surge as investors bought the dip. Nvidia rose 6.4%, while Palantir gained over 7%. The tech-heavy Nasdaq climbed 1.2%, and the S&P 500 increased by 0.5%. However, the Dow Jones Industrial Average fell 0.2%, marking its third consecutive day of losses.
Michael Brown, a senior research strategist at Pepperstone, warned against buying the dip. He stated, “The current market seems unable to sustain any gains, which should serve as a clear warning sign for potential dip buyers.”
Sharp Declines in Major Indices
So far this week, all three major U.S. stock indices have shown sharp declines. The S&P 500 and Nasdaq are both down approximately 3%, while the Dow has fallen 3.4%, potentially marking its worst week since March 2023.
On Tuesday, the S&P 500 briefly entered correction territory, dropping more than 10% from its February peak.
Wall Street Adjusts Expectations
Several investment banks have recently lowered their expectations for U.S. stocks. Goldman Sachs is the latest to issue a warning, following similar concerns from Citigroup and HSBC. Earlier this week, Citigroup downgraded U.S. stocks from “overweight” to “neutral” while upgrading its rating for the Chinese market to “overweight.”
Charu Chanana, chief investment strategist at Saxo Markets, noted that market volatility has returned because “investors are finally realizing that a single weak inflation report may not immediately change the Federal Reserve’s policy path. Growth concerns are now more pressing, and weak inflation data has only
exacerbated these worries.”
February PPI Report and Inflation Outlook
On Thursday, investors received the February Producer Price Index (PPI) report. The U.S. Labor Department reported that the PPI rose 3.2% year-over-year, below the expected 3.3%. The monthly PPI remained flat, missing the 0.3% forecast.
Core PPI, excluding food and energy, increased 3.4% year-over-year, slightly below expectations. Monthly core PPI contracted by 0.1%, contrary to the anticipated 0.3% rise.
Analysts noted that while February’s PPI was unexpectedly flat, the cooling trend is unlikely to persist due to the impact of import tariffs, which are expected to push up prices in the coming months.
Tariffs and Inflation Expectations
The data reflects wholesale inflation stagnation in February, but it was compiled before the Trump administration imposed additional tariffs. Economists predict that these tariffs will soon appear in future data, driving up consumer inflation expectations.
U.S. Commerce Secretary Lutnick also stated that the effects of Trump’s policies would be reflected in third or fourth-quarter data.
Trump’s recent wave of tariffs on major trading partners is expected to increase import prices and, consequently, domestic inflation levels in the U.S.
Market Uncertainty and Growth Concerns
The market remains focused on the uncertainty surrounding Trump’s tariff policies and their impact on the U.S. and global economies. The administration’s unpredictable trade measures have heightened market volatility and raised concerns about economic growth.
On Wednesday, the U.S. officially raised tariffs on all imported steel and aluminum products, further advancing its “America First” trade policy. This move prompted immediate countermeasures from Canada and the European Union.
In response to U.S. tariffs, Canada announced retaliatory taxes on over $20 billion worth of U.S. goods. The European Commission also vowed to take countermeasures, prompting Trump to promise a “counterattack” and accuse the EU of trying to “take advantage of the U.S.”
Fed Rate Cut Expectations
Despite hopes for a technical rebound in U.S. stocks following recent sell-offs, some analysts believe the latest inflation data may not be enough to drive a significant recovery.
Mohit Kumar, chief European economist at Jefferies, stated, “The market remains influenced by Trump’s tariff policies and concerns about U.S. economic growth.”
He added, “Tariffs not only affect growth and inflation but also create uncertainty, which is detrimental to companies engaged in cross-border trade. Our view has always been that tariffs are more about growth than inflation.”
Scott Helfstein, head of investment strategy at Global X, noted, “We still believe the Fed’s next move will be a rate cut, but it’s hard to be confident given the uncertainty surrounding tariffs.”
He emphasized, “The key question is whether tariffs will have a greater impact on growth or prices. In recent weeks, the rate market has signaled that weak growth is the more pressing concern, with expectations of three rate cuts this year.”
Government Shutdown Risks
Concerns about a potential U.S. government shutdown this weekend have added to the uncertainty surrounding the economic outlook. On Wednesday, U.S. stocks rose following lower-than-expected inflation data.
Senate Democratic Leader Chuck Schumer stated that his party would block a Republican spending bill aimed at avoiding a government shutdown on Saturday. He urged Republicans to accept a Democratic proposal to extend funding until April 11. This political standoff has added to traders’ worries, as they face rising unemployment, federal workforce layoffs, and escalating tariff tensions.
Jim Reid, head of global macro research and thematic strategy at Deutsche Bank, noted, “The next hurdle is the potential U.S. government shutdown this Saturday. We’ll see if a deal can be reached. This uncertainty could cause the S&P and Nasdaq to give up yesterday’s gains.”
Tech Sector Updates
Nvidia announced a partnership with Microsoft to provide neural shading support in the April preview of Microsoft DirectX. This will allow developers to access
AI tensor cores in Nvidia GeForce RTX graphics processors, accelerating neural networks in game graphics pipelines.
DA Davidson upgraded Microsoft’s rating to “buy” with a target price of $450.
Tesla is reportedly collaborating with Chinese tech giant Baidu to improve the performance of its advanced driver-assistance systems (ADAS) in China. Baidu has sent a team of engineers to Tesla’s Beijing office to better integrate its navigation maps with Tesla’s Full Self-Driving (FSD) V13 software.
Apple’s Update Cycle Concerns
Morgan Stanley lowered its price target for Apple, warning that about 50% of iPhone users who have not upgraded to the iPhone 16 cited delays in AI features as a factor. The delayed rollout of advanced Siri features could impact Apple’s plans to accelerate iPhone upgrade rates in fiscal 2026.
Apple’s product update cycle remains a key metric for investors. Morgan Stanley previously expected the iPhone upgrade cycle to shorten by 0.2 years in fiscal 2026, potentially driving 255 million iPhone shipments, an 11% year-over-year increase.
AI and Regulatory Developments
Google DeepMind recently launched two new AI models based on Gemini 2.0, designed to help robots adapt to complex environments by leveraging the reasoning capabilities of large language models.
The U.S. Federal Trade Commission (FTC) requested a delay in the trial of Amazon’s alleged deceptive practices in signing up consumers for its Prime program, citing limited resources. The trial has been postponed to September 22.
South Korea’s Supreme Court dismissed a lawsuit by Meta Platforms against the Personal Information Protection Commission over administrative fines and corrective orders. Meta was fined 6.7 billion won for allegedly sharing user data without consent in November 2020.
TSMC Faces Foreign Sell-Off
TSMC’s stock price declined as Taiwan’s stock market experienced its largest foreign sell-off in history on Wednesday.
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