Indices took a dip this morning, as traders mulled over the latest producer inflation report. The Dow Jones Industrial Average fell 0.4%, the S&P 500 slipped 0.4%, and the Nasdaq 100 declined by 0.8%. February's producer prices remained unchanged for final demand, following a previous 0.6% surge, contrary to the anticipated 0.3% rise. The Producer Price Index rose 3.2% annually in February, slightly below the 3.3% increase anticipated by economists. Excluding the unpredictable food and energy sectors, core PPI increased by 3.4% annually, just shy of the expected 3.5% rise.

Meanwhile, the US consumer price index, unveiled on Wednesday, revealed a modest 0.2% rise in prices, defying Bloomberg's prediction of a 0.3% increase. Data showing lower inflation than expected offered investors a glimmer of hope as they sought clues about the Federal Reserve's monetary policy direction for the year. 
In other news, new unemployment claims dropped to 220,000 for the week ending March 8, beating Bloomberg's forecast of 225,000. 

Yesterday, two of the three major Wall Street indexes managed to claw back some ground, thanks to a tech stock rally. Tesla and Palantir, which had seen their values plummet by 25% in a month, led the charge. To be honest, I don't really know why these stocks rose. Even the experts are scratching their heads. This bargain hunting nudged the Nasdaq 100 up by 1.1% and the S&P 500 by 0.5%.

Meanwhile, the Dow Jones stayed put, dipping 0.2% due to declines in consumer staples like Walmart, Coca-Cola, and Procter & Gamble, as well as healthcare giants like Johnson & Johnson and Amgen. Investors seemed to favor tech over defensive stocks, a classic case of shifting priorities.

Yet, Wall Street's usual herd mentality was nowhere to be seen. For instance, Apple shares took a hit, while Boeing soared. I wish I could avoid rehashing the same old story, but the market dynamics remain unchanged. Here's a quick recap: Donald Trump's aggressive tariff and domestic policies lead to lower confidence and economic predictability, which in turn destabilizes markets. On the flip side, we have the Fed's monetary support, progress towards peace in Ukraine, and easing of trade tensions.

Yesterday, February's US inflation data came in slightly below expectations, fueling the market's rebound. The underlying fear is that White House policies will stoke inflation, disrupting the Fed's plans. Any hint of price moderation is thus welcomed. However, skeptics pointed out that the lower inflation was due to factors unlikely to persist, and it occurred before the impact of tariffs. Nonetheless, the market rally continued undeterred.

Across the Atlantic, Europe had a good day too. The Stoxx Europe 600 index rose 0.8% after four days of losses, with technology, industry, and banking sectors leading the way. The gains could have been higher if not for setbacks in two major stocks. Danish pharma giant Novo Nordisk fell nearly 5% after Zealand Pharma inked a deal with Roche for a new anti-obesity drug. Meanwhile, Inditex, Zara's parent company, saw a 7.5% drop due to a sluggish start to 2025, dragging Spain's IBEX index down by 0.35%, making it the only European market in the red.

Elsewhere, it's business as usual. Donald Trump is threatening the EU with tariffs in retaliation for their tariffs on US steel and aluminum. In a belligerent tirade, he accused the EU of being “one of the most hostile and abusive tax and tariff authorities in the world” and of having been “formed solely to take advantage of the United States”. In his sights: the 50% European tax on American whiskey, which he demands be removed immediately under threat of retaliation. “If this tax is not removed, we will apply a tariff of 200% on all wines, champagnes and other spirits from France and other EU countries,” he insisted, before adding, not without provocation: ”It will be excellent for the wine and champagne market in the United States.” A way of flattering American producers, while threatening European exporters with an earthquake.

The US is also embroiled in budget and debt ceiling debates. There's chatter about Russian debt becoming the next hot commodity if Moscow mends fences with the West.

In France, the central bank  trimmed its 2025 growth forecast from 0.9% to 0.7%, factoring in the tariff wars but not recent developments from Germany and the EU. This projection seems more like a placeholder than a reliable forecast.

In the Asia Pacific, trade war fears are taking a toll. Japan is holding steady, but red dominates elsewhere. China is down 0.5% in Shanghai and 1% in Hong Kong. South Korea and Australia are down 0.5%, while Taiwan is down 1.4%. India is faring slightly better, down just 0.1%. Europe is mostly bullish.

Today's economic highlights:

On today's agenda: industrial production CVS GM in the eurozone; in the United States, new unemployment claims and final demand PPI GM. See the full calendar here.

  • Dollar index: $103.9
  • Gold: $2,944
  • Crude Oil (BRENT): $70.25 (WTI) $66.98
  • US 10-year: 4.3%
  • BITCOIN: $82,540

In corporate news:

  • Intel appoints Lip-Bu Tan as CEO, boosting stock by 10% due to his turnaround expertise.
  • Microsoft integrates Pasqal's quantum technology into Azure Quantum amid FTC antitrust probe.
  • Amazon faces a withdrawn FTC request to delay antitrust trial due to resource constraints.
  • Meta Platforms to test community notes feature in the US and takes legal action against a former employee.
  • Adobe reports a 13% increase in adjusted EPS for Q1 2024-25, driven by AI product demand.
  • Chevron experiences a scaffolding collapse injuring three workers at its Texas refinery.
  • Tesla collaborates with Baidu on ADAS in China, while J.P. Morgan cuts its price target.
  • Dollar General reports a 52.5% drop in Q4 EPS and forecasts lower annual sales growth.
  • American Eagle Outfitters diversifies supply chain and forecasts lower-than-expected annual revenue.
  • Mallinckrodt and Endo agree to a $7 billion merger, creating a global pharmaceutical leader.

Analyst Recommendations:

  • Eaton Corporation Plc: Oxcap Analytics upgrades to equalweight from underweight with a target price raised from USD 265 to USD 290.
  • Federal Realty Investment Trust: Truist Securities downgrades to hold from buy with a price target reduced from USD 114 to USD 105.
  • Houlihan Lokey, Inc.: Morgan Stanley upgrades to overweight from underweight with a target price reduced from USD 201 to USD 190.
  • Microsoft Corporation: D.A. Davidson upgrades to buy from neutral with a price target raised from USD 425 to USD 450.
  • Range Resources Corporation: JP Morgan upgrades to neutral from underweight with a target price raised from USD 43 to USD 45.
  • Wells Fargo & Company: RBC Capital upgrades to outperform from sector perform with a target price of USD 80.
  • Diamondback Energy, Inc.: JP Morgan maintains its overweight recommendation and reduces the target price from 212 to USD 167.
  • Evercore Inc.: Morgan Stanley maintains its overweight recommendation and reduces the target price from 400 to USD 306.
  • Netapp, Inc.: Daiwa Securities maintains its outperform recommendation and reduces the target price from USD 145 to USD 105.
  • Sentinelone, Inc.: D.A. Davidson maintains a neutral recommendation with a price target reduced from 25 to USD 18.
  • Uipath Inc.: Canaccord Genuity maintains its buy recommendation and reduces the target price from USD 19 to USD 14.