S&P 500 Index: Rally Pauses as Traders Weigh Tariff Reprieve Against Sticky Inflation Signals

Stocks Edge Higher as Traders Eye Consumer Confidence and Fed Rate Signals

U.S. equities opened Tuesday slightly higher, continuing the cautious momentum from Monday’s sharp rebound. Optimism around potential tariff relief and investor focus on upcoming economic data helped support sentiment, though market conviction remained tepid.

The Dow Jones Industrial Average rose 19 points, while the S&P 500 and Nasdaq Composite traded marginally above flat. The modest gains followed Monday’s strong rally, where the Dow surged nearly 600 points and the S&P 500 and Nasdaq gained 1.8% and 2.3%, respectively. That rebound came after a turbulent stretch that briefly pushed the S&P 500 into correction territory earlier in the month.

Is Tariff Relief Helping Stabilize Market Nerves?

Investors took comfort in reports suggesting the White House might scale back the scope of proposed tariffs. Market sentiment was buoyed after President Trump indicated he may offer exemptions to certain countries and industries. However, he reaffirmed that tariffs targeting sectors like autos and pharmaceuticals were still likely to proceed soon. Traders have interpreted the softening rhetoric as a possible de-escalation, providing short-term support to equities.

Consumer Confidence Reading Looms Large

All eyes are on the Conference Board’s consumer confidence index, due later in the session. Economists expect a decline to 93.5 from February’s 98.3. Any downside surprise could reinforce concerns over slowing economic momentum and weigh on cyclical stocks. Conversely, a stronger-than-expected reading may bolster risk appetite in a market searching for positive catalysts.

Fed’s Bostic Signals Cautious Policy Path

Atlanta Fed President Raphael Bostic tempered expectations for aggressive monetary easing, shifting his outlook to just one rate cut for the year, down from two. Bostic cited persistent inflation pressures as the reason for dialing back expectations, noting that a clearer path to the Fed’s 2% target remains elusive. Although Bostic is not a voting member on the FOMC this year, his stance reflects a growing split among policymakers—four see one cut, four see none, and eleven still forecast two.

Market Outlook Hinges on Data and Fed Clarity

With recent gains following steep pullbacks, traders remain alert to incoming data and Fed commentary. Consumer confidence and upcoming inflation indicators will be key to gauging the resilience of the recovery. For now, rate cut hopes and easing trade tensions offer near-term support, but any upside may be tempered by inflation stickiness and mixed Fed messaging.

More Information in our Economic Calendar.