S&P 500 ends market session with gains for the first time in 6 days

The S&P 500 finally snapped its six-day losing streak on Wednesday, closing 0.5% higher as investors rushed into beaten-down tech stocks.

The Nasdaq Composite jumped by 1.2%, while the Dow Jones Industrial Average fell by 0.2%, extending its own three-day slide, according to data from CNBC.

Futures for major indexes ticked up after the closing bell. S&P 500 futures rose 0.2%, Nasdaq 100 futures climbed by 0.2%, and Dow futures added 45 points, or 0.1%.

In extended trading, Intel surged 10% after appointing Lip-Bu Tan as its new CEO, while Adobe dropped 4% after projecting weaker-than-expected earnings for its second fiscal quarter.

Tech stocks drive market rebound, the Dow lags behind

Tech stocks were the biggest winners. The technology sector gained 1.6%, leading the entire market as investors rushed to scoop up shares of companies that had been battered in recent sessions.

Nvidia and Palantir Technologies were among the biggest gainers, helping the Nasdaq Composite outperform other indexes.

But not every part of the market joined the rally. The Dow Jones Industrial Average struggled, slipping another 0.2% to mark its third straight decline. Investors avoided traditional blue-chip stocks, focusing instead on high-growth tech names.

Meanwhile, the Consumer Price Index (CPI) report for February showed inflation cooling, with prices rising 0.2% from the previous month and 2.8% over the past year, which calmed some fears about the economy, but trade concerns kept investors on edge.

The Federal Reserve’s next move remains uncertain. “We still believe the next Fed rate move is lower, but it is hard to have high confidence with the impact of tariffs still uncertain,” said Scott Helfstein, head of investment strategy at Global X.

Trump’s tariffs and inflation fears loom over markets

Donald Trump’s new tariffs on steel and aluminum officially went into effect on Wednesday, adding 25% duties on steel imports and 10% on aluminum, regardless of the country of origin.

That sent shockwaves through the global economy. In response, Canada fired back with a 25% retaliatory tariff on more than $20 billion worth of U.S. goods.

Traders had already been expecting some kind of technical bounce after recent sell-offs, but concerns over Trump’s trade policies kept the rally in check.

The S&P 500 briefly fell into correction territory on Tuesday, slipping 10% below its February record high. The Nasdaq Composite and S&P 500 are both down 3% for the week, while the Dow has dropped 3.4%, making this its worst week since March 2023.

More economic reports are due Thursday, including the latest weekly jobless claims and the February producer price index (PPI), a key measure of wholesale inflation.

Investors will also be watching earnings from Dollar General and Ulta Beauty to gauge consumer spending trends. Some investors are moving their money away from U.S. markets.

“Rather than an outright sell-off, what we’ve seen is largely rotation,” said Michael Green, chief strategist at Simplify Asset Management.

“There’s been a combination of money rotating out of the United States and into Europe, Japan, and Canada. To a certain extent, that’s contributed to the weakness in the dollar.”

Green also warned that inflation might not be as contained as some think. “That likely puts additional pressure on forward inflation trends and offsets some of the benefits of a weaker economy,” he said. If inflation continues to slow, it could give the Federal Reserve room to cut interest rates if the economy weakens.

Volatility traders profit as market swings intensify

While most investors have taken losses in recent weeks, volatility traders are cashing in. Since February 18, the S&P 500 has dropped 8.4%, and the Nasdaq Composite has fallen 11.9%.

That sharp downturn has sent the Cboe Volatility Index (VIX) soaring. The VIX, often called the “fear gauge”, has spiked 52% over the past month as uncertainty rattles the stock market.

“We make money when markets are in dispossession,” said Kris Sidial, co-chief investment officer at Ambrus Group, a hedge fund specializing in volatility trading.

“Many investors increased their exposure to stocks when Trump was elected, thinking the second term would be like the first. They’re now seeing they’re offsides and have to rebalance.”

Sidial and other traders use options strategies to profit from market swings. Michael Nauss, a trader at StatsEdgeTrading, described one approach: “You buy puts and calls for the same strike price at the same expiration date. It’s called bracketing and allows traders to make money in both directions.”

Traders are also taking advantage of higher premiums in the options market. “Put buying is expensive right now as investors rush to protect their positions,” Nauss added.

Options trading has exploded in popularity. Robinhood, a major trading platform, reported last week as its biggest week ever for options volume. With stock market uncertainty growing, more investors are turning to derivatives to hedge their bets or speculate on wild price swings.

While most analysts still don’t expect a recession, the odds of an economic downturn have increased since last year. Alec Kersman, a senior executive at Pimco, noted at CNBC’s CONVERGE LIVE event in Singapore that the chances of a U.S. recession are now higher than in 2024.

Meanwhile, Trump’s tariffs could reshape the global economy, pushing trade partners to find alternatives to U.S. imports. If the trend continues, the U.S. may no longer be the dominant force in global trade.

Markets remain in flux, with investors trying to navigate the uncertainty. With the Federal Reserve, inflation, and trade policies all in play, traders are expecting more volatility in the weeks ahead.

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