US stocks gained after a volatile session as dip buyers emerged after a cooler-than-forecast February inflation report.
The S&P 500 Index rose 0.5% Wednesday, for the first day of gains this week, and following three weeks of losses. The Nasdaq 100 Index advanced 1.1% and the Dow Jones Industrial Average slipped 0.2%. The Cboe Volatility Index fell to about 24, holding above the 20 level for the eighth straight day.
Stocks climbed after the latest US consumer price index report showed that inflation rose at the slowest pace in four months. Some of the day’s gains can also be attributed to technical indicators, after declines in US stocks pushed them into oversold territory, with all major benchmarks trading below their 200-day moving averages over the past week.
“Stocks moved up from extreme oversold conditions we have had in place over the last week or so,” said Jonathan Krinsky, chief market technician at BTIG. “While I think we’re at a tradable bottom, I don’t think it’s the final bottom,”
Still, technical indicators suggest that while stocks may recover after being battered for days by worries that a trade war will undermine economic growth, there are still thresholds to hit before a rally starts. Those would include the S&P 500 recapturing its 200-day moving average.
The S&P 500 closed around 9% below its all-time high after stocks struggling in recent days as President Donald Trump presses his trade dispute with America’s largest commerce partners.
“Investors are more concerned with the uncertain forward outlook for inflation and growth as tariffs take effect,” wrote Kevin Brocks, director of 22V Research.
Sell-side strategists have been growing gloomier about US stocks. Goldman Sachs Group Inc. strategists lowered their year-end target for the S&P 500 Index to 6,200 from 6,500. The reduction was also in view of declines in the “Magnificent 7” stocks.
The move comes after Citigroup and HSBC downgraded their views on US equities this week, citing similar worries around the economy and noted better opportunities elsewhere.
“There is simply a lack of confidence,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “Given the correction was sharp and caught many investors off guard, investors are quickly using the bounce to reduce risks.
Hedge funds positioning has also shown signs of de-risking. Combined de-grossing activity by hedge funds on Friday and Monday was the largest in four years and ranks among the top events over the past 15 years, according to Goldman Sachs prime desk.
Here Are the Most Notable Movers
- Colgate-Palmolive shares fell 3.5% after Chief Investor Relations Officer and Executive Vice President of M&A John Faucher said the company has seen a slowdown in consumer demand in recent months.
- Walmart shares fell for a fifth straight session. A negative close Wednesday would mark the longest losing streak for the retail giant since July 2024.
- Intel shares rose 4.6% after Reuters reported that TSMC has pitched Nvidia, Advanced Micro Devices, Broadcom and Qualcomm about taking stakes in a joint venture that would operate the chipmaker’s factories.
- ABM Industries shares dropped 8.7% after the provider of cleaning services for airlines and airports reported first-quarter results.
- Verizon Communications Inc. shares fell 2% after Wolfe Research downgraded the telecom company to peerperform from outperform.
-
Notes From the Sell-Side
- Capital One Financial shares gained 3% after Evercore ISI raised the credit card issuer to outperform from in line, saying the stock’s valuation doesn’t reflect long-term upside to earnings and returns driven by the combined Capital One-Discover company.
- Software companies have come under heavy selling pressure of late, but the group is starting to look attractive, according to Bank of America.
- Analyst Brad Erickson notes that SEAT management signaled they may have to spend more on performance marketing to protect market position.
- Verizon Communications Inc. shares fell 2% on Wednesday, after Wolfe Research downgraded the telecom company to peerperform from outperform.
- Eaton received a bullish upgrade from KeyBanc following the company’s investor day, with analyst Jeffrey Hammond calling management’s long-term targets beatable and attractive
- Talen Energy coverage starts with an overweight rating at Morgan Stanley, which touts the power producer’s attractive valuation and potential catalysts.
- PepsiCo shares fell 2.8% in premarket trading on Wednesday after Jefferies cut its rating to hold from buy, saying the stock’s current price offers “limited upside.”
Related Market News
- Taking Stock: Markets are facing an episode of de-risking that started in the US and is now feeding into Europe. While an improving geopolitical landscape is helping lift sentiment, investors are worried about growth and will be looking for more relief in economic data.
- European Stocks: European stocks advanced Wednesday after four days of declines as Ukraine accepted a ceasefire proposal brokered by the US, although worries about American economic growth lingered.
- Inside Asia: Most Asian currencies traded lower against the dollar as investors awaited the release of US inflation data. Malaysia’s ringgit lagged peers amid tariff anxiety and foreign outflows from stocks.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out some of our webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
More Buffer ETFs Topics >
