US markets open down despite positive CPI data
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The news: US stocks opened lower on Thursday, as stock futures drop on persisting trade war concerns.
The numbers: The S&P 500 was down 2.3% at open, after soaring 9.5% the day prior, while the Nasdaq fell 2.8%, also sliding back from its 12% surge on Wednesday.
Tech stocks were leading the falls, with Tesla dropping over 5% and Nvidia tumbling almost 5%. Apple and Amazon also fell over 2%.
In mid-afternoon trading across the pond, the Stoxx Europe 600 index was up 5.2% after surging above 7% in early trading. France’s Cac 40 was up 5.5% and Germany’s Dax was up 5.7%, both paring back earlier gains. The FTSE 100 was up 4.5% after reaching 6.3% in morning trading.
The context: Wall Street’s risk appetite pared back significantly on Thursday, after the previous session saw one of the biggest bursts of buying in over a decade. Almost every stock in major gauges rose during the session with over USD1.5 trillion ($2.42 trillion) in share value changing hands after Trump announced his 90-day tariff pause.
The US falls come despite an upbeat CPI report, which saw US inflation come in weaker than expected in March, with headline CPI falling 0.1%, largely due to a fall in fuel prices. Core inflation ran at 2.8% on an annual basis, the lowest since spring 2021. The CPI data predates significant economic policy changes currently underway by President Trump.
US two-year Treasury yields slid on the inflation data, falling as much as 11 basis points, easing down to around 6 basis points at 3.85% in early trading.
Even despite the cooler-than-expected CPI data, it appears that investors remain concerned about the lasting impacts that Trump’s tariffs could bear on the economy.
While the subdued inflation is widely being taken as a positive, Bret Kenwell at eToro told Bloomberg: “At the end of the day, we do need to see lower inflation to justify lower rates from the Fed and ease the burden on consumers. However, getting lower inflation due to a material drop in economic activity — and thereby jeopardizing the economy — isn’t the best route to take.”
The sources: Bloomberg, Financial Times, Bureau of Labor Statistics
