The major U.S. index futures for the Dow Jones, S&P, and Nasdaq are currently pointing to a modestly lower open on Thursday, with stocks likely to move back to the downside after ending the previous session mostly higher.
Ongoing concerns about President Donald Trump’s trade policies may weigh on Wall Street after he suggested the U.S. would respond to the European Union’s countermeasures with even more tariffs.
With the EU saying it would impose tariffs on approximately $28 billion worth of U.S. goods in response to U.S. tariffs on steel and aluminum imports, Trump indicated the U.S. would react with reciprocal tariffs
“Whatever they charge us with, we’re charging them,” Trump told reporters on Wednesday. “Nobody can complain about that.”
Trump later threatened in a post on Truth Social to impose a 200 percent tariff on all wines, champagnes and alcoholic products coming out of the EU in response to a “nasty” 50 percent tariff on whisky.
The futures climbed off their worst levels following the release of a Labor Department report showing producer prices in the U.S. were unexpectedly flat in the month of February.
The Labor Department said its producer price index for final demand was unchanged in February after climbing by an upwardly revised 0.6 percent in January.
Economists had expected producer prices to rise by 0.3 percent compared to the 0.4 percent growth originally reported for the previous month.
The report also said the annual rate of growth by producer prices slowed to 3.2 percent in February from an upwardly revised 3.7 percent in January.
The annual rate of producer price growth was expected to dip to 3.3 percent from the 3.5 percent originally reported for the previous month.
A separate report released by the Labor Department on Thursday unexpectedly showed a modest decrease by first-time claims for U.S. unemployment benefits in the week ended March 8th.
After seeing considerable volatility early in the session, stocks moved mostly higher over the course of the trading day on Wednesday. With the upward move, the Nasdaq and the S&P 500 regained ground after ending Tuesday’s trading at their lowest closing levels in six months.
The tech-heavy Nasdaq led the way higher, jumping 212.35 points or 1.2 percent to 17,648.45. The S&P 500 also climbed 27.23 points or 0.5 percent to 5,599.30, although the narrower Dow bucked the uptrend and dipped 82.55 points or 0.2 percent to 41,350.93.
The strength on Wall Street came following the release of a closely watched Labor Department report showing consumer prices in the U.S. increased by slightly less than expected in the month of February.
The Labor Department said its consumer price index crept up by 0.2 percent in February after climbing by 0.5 percent in January. Economists had expected consumer prices to rise by 0.3 percent.
Excluding food and energy prices, the core consumer price index also rose by 0.2 percent in February following a 0.4 percent increase in January. Core prices were also expected to climb by 0.3 percent.
The report also said the annual rate of consumer price growth slowed to 2.8 percent in February from 3.0 percent in January. Economists had expected the pace of price growth to edge down to 2.9 percent.
The annual rate of core consumer price growth also slowed to 3.1 percent in February from 3.3 percent in January. Core price growth was expected to dip to 3.2 percent.
The tamer-than-expected inflation data led to some optimism about the Federal Reserve resuming interest rate cuts in the near future.
“With a lower-than-expected inflation number (both month-over-month and year-over-year), at least the Fed still has the flexibility to step in to support a weaker economy, and that would be good news for markets,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
Buying interest was somewhat subdued, however, as concerns about the impact of new trade policies continue to weigh on the markets.
With new U.S. steel and aluminum imports taking effect today, the European Union said it would impose counter tariffs on 26 billion euros ($28 billion) worth of U.S. goods beginning next month.
Canada has also announced it will impose 25 percent tariffs on more than $20 billion worth of U.S. goods in retaliation for the steel and aluminum duties.
Semiconductor stocks saw substantial strength amid a surge by shares of Nvidia (NASDAQ:NVDA), with the Philadelphia Semiconductor Index jumping by 2.5 percent after ending the previous session at a nearly eleven-month closing low.
Significant strength was also visible among software stocks, as reflected by the 1.5 percent gain posted by the Dow Jones U.S. Software Index.
Banking and networking stocks also saw some strength on the day, while airline, telecom and pharmaceutical stocks showed notable moves to the downside.