S&P 500 Forecast: CPI Data and Fed Policy in Focus as US Stock Market Awaits Key Signals

Stock Futures Rise as Markets Eye Inflation Data and Tariff Impact

U.S. stock futures edged higher early Wednesday as traders assessed the impact of new tariffs and awaited the latest consumer inflation report. Dow Jones futures rose 93 points (0.22%), while S&P 500 and Nasdaq 100 futures gained 0.29% and 0.33%, respectively. The market’s focus now shifts to the February Consumer Price Index (CPI), which could influence the Federal Reserve’s next policy move.

How Did Tariffs Drive Tuesday’s Selloff?

Markets faced sharp losses on Tuesday after President Donald Trump announced a 50% tariff on Canadian steel and aluminum imports. The move was in response to Ontario’s decision to impose a 25% levy on electricity exports to the U.S. However, after Ontario Premier Doug Ford paused the surcharge, the White House scaled back the tariff hike, keeping duties at 25% instead.

Despite this reversal, the uncertainty led to a selloff in equities. The Dow closed down nearly 480 points (1.1%), while the S&P 500 fell 10% from its previous high before paring losses. The Nasdaq Composite ended the session down 0.2%.

Which Sectors Struggled the Most?

Tuesday’s losses were broad-based, but industrials and materials stocks were hit hardest due to tariff concerns. The S&P 500’s industrial sector fell 1.5%, weighed down by steel and aluminum producers facing new trade uncertainties. The materials sector also declined over 1% as higher import costs pressured sentiment.

Tech stocks showed relative resilience, with the Nasdaq’s decline limited to 0.2%. However, the sector remains under pressure, as the “Magnificent 7” stocks continue to slide.

Will CPI Data Influence Fed Policy?

Traders now turn their attention to the CPI report, which economists expect to show a 0.3% rise in February, with S&P 500. A higher-than-expected reading could reinforce concerns about inflationary pressures and slow the Fed’s path to potential rate cuts.

Warren Pies, co-founder of 3Fourteen Research, cautioned that the market is still waiting for a policy response from either the Fed or the administration. “I don’t think it’s time to buy the dip just yet,” he told CNBC’s Closing Bell.

Stocks on the Move After Hours

Several stocks saw notable moves in extended trading:

• Groupon (GRPN) jumped nearly 7% after issuing upbeat full-year revenue guidance above analyst expectations.

• Heritage Insurance (HRTG) fell 4% after reporting lower year-over-year net income.

• Casey’s General Stores (CASY) gained 3% following stronger-than-expected earnings and revenue.

What’s Next for Traders?

With inflation data set to release today, traders will be watching for signals on how the Fed might adjust policy. A softer CPI reading could ease market concerns, while a hotter number may pressure equities further. Volatility is expected to remain elevated as investors digest both economic data and trade developments.

More Information in our Economic Calendar.