CPI report in focus: what to expect 12/03/2025

HOT stories for today

 

US market wrap:
 

• The U.S. stock market remains under pressure as investor confidence weakens amid concerns over President Trump’s tariffs, with the S&P 500 struggling to rebound from a sharp decline nearing correction levels. Investors continue to focus on the negative impacts of tariffs, said Andrew Slimmon, a senior portfolio manager at Morgan Stanley Investment Management, though he doubts they will significantly increase inflation or derail the economy.
• The S&P 500 dropped 0.8% Tuesday to 5,572.07 after a volatile trading day, according to FactSet. Trump announced an additional 25% tariff on Canadian steel and aluminum, citing Ontario’s 25% duty on electricity exports to the U.S., but later reversed course after Ontario scrapped the surcharge. The White House will now stick with the previously planned 25% tariff on Canadian metals. Meanwhile, Ukraine has agreed to a U.S.-proposed 30-day ceasefire in its conflict with Russia, boosting market sentiment. Stocks edged higher Tuesday afternoon as traders grew more optimistic, though many remain cautious, awaiting clearer signs of stability with little guidance from earnings and economic data.
   

CPI report in focus: what to expect

• A key inflation report is set for release Wednesday, with the February consumer price index (CPI) expected to rise 0.3% across a broad range of goods and services. Annually, this would bring overall inflation to 2.9% and core inflation—excluding food and energy—to 3.2%, both slightly lower than January but still above the Federal Reserve’s 2% target. While inflation has been gradually declining, it remains high enough to keep the Fed cautious at its upcoming meeting.
• Morgan Stanley economist Diego Anzoategui anticipates a slowdown in inflation but cites used car prices, seasonal trends, and supply constraints as factors keeping certain costs elevated. Market uncertainty persists over President Trump’s tariffs, which could fuel inflation and slow growth. However, Fed Chair Jerome Powell has suggested tariffs typically lead to short-term price spikes rather than sustained inflation. If that holds, policymakers may overlook trade-driven price increases and proceed with expected rate cuts later this year. Goldman Sachs predicts the Fed will wait for clearer signals before likely cutting rates by 0.5% in 2025. The Bureau of Labor Statistics will release the CPI report at 8:30 a.m. ET.

 
Stocks on the move: 
      

• Boeing (BA +4%): February shipments jumped 63% year-over-year after January’s strongest monthly performance since 2023. However, retail investors remain frustrated by the stock’s lack of movement.
• Verizon & AT&T (VZ -6%, T -5%): Their first-quarter and full-year forecasts at Deutsche Bank’s 33rd Annual Media, Internet & Telecom Conference failed to impress.
• Reddit (RDDT +15%): Loop Capital analyst Alan Gould called the community-driven social media company’s stock “highly appealing” after a 50% drop in a month.
• IonQ, Inc. (IONQ +3%): The high-performance quantum computing firm secured $360 million in net proceeds from its at-the-market (ATM) share offering.
• ServiceNow (NOW +3%): Plans to acquire Moveworks, a California-based AI-powered assistant provider, in a $2.85 billion cash-and-stock transaction.

Today’s action

• Asia-Pacific markets showed a mixed performance Wednesday as Wall Street’s major indices fluctuated amid uncertainty over President Trump’s tariff policies and recession fears in the U.S. Japan’s Nikkei 225 rose 0.31% as annual wholesale inflation eased to 4% in February from a seven-month high of 4.2% in January. South Korea’s Kospi climbed 1.31%, while the Kosdaq gained 1.19% in late trading. Hong Kong’s Hang Seng Index slipped 0.23%, and China’s CSI 300 declined 0.22%. Meanwhile, China’s 10-year government bond yield hovered at 1.94%, approaching the key 2% level.
• U.S. stock futures edged higher early Wednesday after Trump’s 25% tariffs on steel and aluminum exports to the U.S. took effect. Investors also awaited the upcoming consumer inflation report. Dow Jones futures rose 93 points (0.22%), S&P 500 futures gained 0.29%, and Nasdaq 100 futures increased by 0.33%, with traders anticipating the February consumer price index reading as the next market driver.

Wahtclist: ORCL, BA, IONQ, NOW, RDDT, ADBE, ZIM, TSLA 

Bitcoin

• Bitcoin surged past $83,000 on Tuesday, rebounding from a low of $76,000, following Ukraine's agreement to a U.S.-proposed 30-day ceasefire in its conflict with Russia. This development, pending Russia's acceptance, improved market sentiment, leading to gains across both traditional and cryptocurrency markets. 
• Additionally, Ontario Premier Doug Ford's decision to suspend a 25% electricity export surcharge against several U.S. states contributed to easing trade tensions, further bolstering investor confidence.  These geopolitical developments have positively impacted global financial markets, with Bitcoin experiencing a notable price increase.  
  Watchlist: Bitcoin: 78 000-100 000, Ethereum:1900-2600, Solana: 100-176

Forex

• The Japanese Yen remains under pressure against the U.S. Dollar for the second straight day, with USD/JPY holding above 148.00 in Tuesday’s Asian session. Concerns over potential new tariffs from Trump and a positive risk sentiment in equity markets weaken the safe-haven appeal of the Yen. However, diverging monetary policies between the Bank of Japan and the Federal Reserve may limit further downside for JPY.
• Meanwhile, EUR/USD slipped to around 1.0900 during Wednesday’s Asian session, ending a three-day winning streak as renewed USD demand weighed on the pair. Traders now await the U.S. February CPI inflation report, set for release later in the day, for further market direction.
  Watchlist: EUR/USD: 1.0700-1.0900, USD/JPY: 148-160

Basic Materials

• West Texas Intermediate (WTI) crude rebounded to around $66.25 in early Wednesday trading, supported by a weaker U.S. Dollar and escalating geopolitical tensions in the Middle East. However, U.S. crude inventories rose by 4.247 million barrels last week, according to API data, which could limit further gains.
• Gold (XAU/USD) hovers near its weekly high, struggling to extend its overnight advance as a modest USD recovery and improved risk sentiment cap gains. Trade war concerns and growing expectations of multiple Fed rate cuts amid fears of a tariff-driven slowdown continue to support the safe-haven metal ahead of the U.S. CPI inflation report.
  Watchlist: GOLD 2600-2945, US Oil: 65.00-79.00

Key Economic Events Today:

EST time
08:30 am: USD Core CPI, CPI
10:30 am: USD Crude Oil Inventories
01:01 pm: USD 10-y Bond Auction
02:00 pm: USD Federal Budget Balance

Earnings

BMO (Before the US Market opens)
ABM           ABM Industries
VNET         VNET Group
ZIM             ZIM Integrated Shipping
AMC (After the US Market closes): ADBE, CCI, PATH, S

The TEFS Analyst team wishes you a successful day!