Wall Street Reacts to Inflation Surge and Trade Tensions

NEW YORK, Feb. 4, 2025 — Stock futures rose slightly Thursday as traders assessed inflation data that exceeded expectations amid ongoing concerns over global trade tensions. Futures linked to the S&P 500 increased by 0.1%, while the Nasdaq 100 shifted up by 0.3%, and the Dow Jones Industrial Average rose by 82 points, or 0.2%.

The Producer Price Index (PPI) for January showed a 0.4% increase, surpassing Dow Jones’ consensus estimate of 0.3%. Core PPI, which excludes volatile food and energy prices, matched expectations with a 0.3% rise. This data follows Wednesday’s Consumer Price Index (CPI), which indicated rapid inflation recovery in January.

“Thursday’s stronger-than-expected PPI helps to confirm, especially after Wednesday’s hot CPI, that inflation did indeed come roaring back in January,” said Paul Stanley, chief investment officer at Granite Bay Wealth Management. “Investors will need some time to reassess inflation expectations and rising bond yields as a result of this data.”

In premarket trading, shares of a networking hardware manufacturer surged over 6% after the company raised its full-year guidance and exceeded earnings expectations. Conversely, shares of another tech company fell more than 10% after quarterly user figures disappointed investors, while a major coffee shop chain saw its stock rise approximately 24% due to better-than-expected earnings.

The stock market has been volatile recently, particularly after consumer prices accelerated more than anticipated on Wednesday, delaying expectations for interest rate cuts potentially until September.

Moreover, investors face uncertainty from rising global trade tensions. The White House announced on Wednesday that President Donald Trump plans to impose tariffs on imports ahead of a meeting with Indian Prime Minister Narendra Modi. Trump stated on Truth Social, “Today in the big one: reciprocal tariffs.”

Earnings reports continue to roll in, with major companies like Kraft Heinz expected to report their results after Thursday’s market close. According to FactSet, more than 69% of S&P 500 companies that have released earnings thus far reported results exceeding Wall Street’s expectations.

In notable earnings news, a digital trading platform’s stock jumped 13% following a report of $1.01 billion in revenue for the fourth quarter, surpassing the LSEG consensus estimate of $944.6 million. Resort and casino companies also reported strong numbers, with earnings topping analysts’ expectations. However, shares of another tech firm fell 8% after fourth-quarter earnings came in below predictions despite posting a significant year-over-year increase in unique daily users.

A sluggish full-year outlook and slow organic sales growth have prompted Bank of America to downgrade shares of Kraft Heinz from buy to underperform, lowering the price target from $36 to $30. Analyst Peter Galbo noted that unlike other food peers, Kraft Heinz continues to face revenue challenges, suggesting it may struggle if industry volumes normalize.

As Wall Street navigates a landscape affected by inflation, trade policies, and corporate earnings, the focus remains on how these variables will shape future market conditions.