US Indices: Nasdaq and Dow Climb as Inflation Softens—Will Bulls Take Control?

Futures on the Dow Jones Industrial Average futures rose 312 points, or 0.8%, after a steep two-day sell-off. The S&P 500 gained 1.2%, following its approach toward correction territory, while Nasdaq 100 futures climbed 1.7%, fueled by premarket gains in Nvidia and Tesla.

Recent market weakness was driven by a sharp sell-off in major tech names. However, several rebounded in premarket trading. Tesla rose 3.6%, extending Tuesday’s gains after President Donald Trump signaled he would buy a Tesla and Morgan Stanley recommended buying the dip. Nvidia gained 2.3% after a steep March pullback. Meta Platforms, Amazon, and Alphabet all added over 1%.

Chip stocks were in focus after reports that TSMC proposed a joint venture with Intel, Nvidia, AMD, and Broadcom to operate Intel’s foundry unit.Intel shares surged 8% premarket, while Nvidia and AMD also advanced.

Which Stocks Are Making the Biggest Moves?

Beyond tech, several stocks made notable premarket swings. Groupon soared 21% after issuing stronger-than-expected revenue guidance. Crocs climbed 4.2% following an analyst upgrade from Loop Capital.

On the downside, PepsiCo dipped after Jefferies downgraded the stock, citing weak performance in its U.S. beverage and Frito divisions. Sunrun slipped 0.6% after Jefferies downgraded the solar company, citing ongoing uncertainty in the industry.

U.S. Treasury yields ticked higher after the inflation report. The 10-year yield rose 4 basis points to 4.328%, while the 2-year yield climbed over 5 basis points to 3.999%. Lower-than-expected inflation figures tempered stagflation fears but did not prompt an immediate shift in Fed policy expectations.

Will Trade Tensions Impact the Market?

Trade policy remains a headwind, with Trump’s 25% steel and aluminum tariffs taking effect Wednesday. The European Union announced retaliatory tariffs on $28.3 billion worth of U.S. imports, starting in April. Meanwhile, Canada’s proposed 25% electricity levy on U.S. exports led to threats of higher tariffs, though both sides softened their stance.

Market Outlook: Why This Rally May Be Short-Lived

While the softer inflation reading provides temporary relief, it may not be enough to sustain a prolonged rally. The market remains under pressure from multiple fronts—rising Treasury yields, ongoing trade tensions, and uncertainty over Fed policy. The S&P 500’s approach to correction territory signals broader fragility, and tech stocks remain vulnerable after recent heavy selling.

Additionally, the Fed is unlikely to pivot to rate cuts quickly, especially with core CPI still above the 2% target. Without a clear signal of policy easing or economic acceleration, traders may use this bounce as an opportunity to reduce risk rather than chase a sustained move higher.

Further downside risks include a potential escalation in trade disputes and upcoming economic data that could reignite inflation fears. Traders should watch Thursday’s producer price index (PPI) closely, as any upside surprise could reverse today’s relief rally. For now, the bounce looks more like a reflexive rebound than the start of a meaningful recovery.

More Information in our Economic Calendar.