US stocks are under pressure due to Trump's tariffs, and the market focuses on CPI data and inflation expectations

The US stock market has recently been impacted by the uncertainty of Trump's tariff policy. Investors are concerned about the impact tariffs may have on consumers and the overall economy, and market sentiment continues to be sluggish. In this context, the upcoming consumer price index (CPI) data for February has attracted much attention, and investors hope to use this to determine whether current concerns about stagflation are reasonable.

According to economists surveyed by foreign media, the US CPI rose 0.3% month-on-month in February, and the year-on-year growth rate will drop to 2.9% from 3.0% last month. The core CPI (excluding food and energy prices) is expected to rise 0.3% month-on-month and 3.2% year-on-year.

The Zhitong Finance App learned that market analysts believe that if the CPI data is higher than expected, and Trump's tariff policy may increase inflation, the Federal Reserve may be forced to slow down the pace of interest rate cuts, which may deepen the stock market sell-off, and even bring the NASDAQ index closer to the bear market area. However, if the CPI data is moderate or lower than expected, it may increase investors' confidence in the Fed's interest rate cut, thereby boosting market sentiment. However, XTB research director Kathleen Brooks said that unless Trump relaxes some of the policies that have had a serious impact on the economy, it may be difficult for the market to actually return to stability.

Wall Street generally believes that Wednesday's CPI data is only a preliminary reflection of the impact of Trump's tariffs on inflation. In February of this year, Trump imposed a 10% tariff on Chinese goods, and China occupies an important position in imports of household goods, clothing, and electronics. Bank of America global research economists Stephen Juneau and Jeseo Park point out that this may drive up US inflation.

However, there are still many uncertainties about Trump's tariff policy, and investors may need more time to see its full impact in CPI data. Brooks said that if the current CPI data shows a clear upward trend due to tariff factors, it may trigger widespread risk aversion in the market, which will be bad for the bond and stock markets.

In addition to the CPI data, the market will also pay close attention to the University of Michigan Consumer Inflation Expectations Index. The data will be released on Friday to help assess consumer inflation expectations for the coming year. The index jumped from 3.3% to 4.3% last month, the highest level since November 2023, and is the fifth time in the past 14 years that there has been such a significant increase in a single month.

Tani Fukui, senior director of global economic and market strategy at MetLife Investment Management, believes that the index needs to be interpreted carefully because consumer inflation expectations are often affected by short-term price fluctuations. She said that if consumer inflation expectations rise sharply, it may further suppress the stock market, thereby affecting consumer spending and forming a vicious cycle. However, if it is only a moderate change, it will not have a major impact on the market.

On Tuesday, the three major US stock indices closed down across the board. The Dow Jones Industrial Average fell 478 points, or 1.14%, the S&P 500 index fell 0.76%, and the Nasdaq index fell 0.18%.