The latest U.S. inflation data appears to be a welcome surprise for investors. The consumer price index rose 0.2% month over month in February and 2.8% year on year. Economists polled by Dow Jones expected CPI to have risen 0.3% and 2.9%, respectively. Wall Street took it as a positive, as the numbers give the Federal Reserve some cover in the event that tariffs from President Donald Trump’s administration drive a surge in prices. Dow Jones Industrial Average futures were up more than 300 points, while S & P 500 and Nasdaq-100 futures climbed more than 1% each. Stocks have tumbled recently. For the week alone, the S & P 500 is down more than 3% — briefly dipping into correction territory on Tuesday (down 10% from a record set last month). The Dow and Nasdaq are down 3.2% and 4.2%, respectively, this week. Those declines led Goldman Sachs to lower its 2025 target on the S & P 500 . Here’s what investors and strategists had to say about the report, and what it means for the market — and future Fed policy moves: Kay Haigh, global co-head of fixed Income and liquidity Solutions at Goldman Sachs Asset Management: “The February CPI release showed further signs of progress on underlying inflation, with the pace of price increases moderating after January’s strong release. While the Fed is still likely to remain on hold at this month’s meeting, the combination of easing inflationary pressures and rising downside risks to growth suggest that the Fed is moving closer to continuing its easing cycle.” Ian Lyngen, head of U.S. rates at BMO Capital Markets: “The most interesting aspect of the release isn’t the data itself, which was bond-friendly, but rather the market’s lack of follow-through. While there was an initial kneejerk bid to the headlines, the buying interest quickly faded as investors refocused on the potential reflationary implications from the trade war. This is the first time in the cycle in which such a benign inflation print has been completely discounted in favor of other risks.” Ryan Weldon, investment director and portfolio manager at IFM Investors: “Today’s CPI print softened from the large January print but remains firmer than what the Fed will want to see before resuming cuts to their policy rate. While services inflation is trending downwards, the impact of uncertainty and tariff threats has buoyed goods inflation, which should support the Fed holding rates at their next few meetings while they wait for less volatile data and clearer policy execution from the administration.” Seema Shah, chief global strategist at Principal Asset Management: “Equities are unlikely to get into full Fed put glee mode. It’s worth remembering that this may be the calm CPI report before the storm. Not only does the Fed need to wait for tariff policy clarity, but once tariff implementation arrives it is likely to bring at least some price increases, with the inflation picture potentially getting uglier as the months go on. The Fed – and markets – are not yet in the clear.” Skyler Weinand, chief investment officer at Regan Capital: “Wednesday’s weaker-than-expected CPI is a slight sigh of relief for the Federal Reserve and the markets, because it shows that inflation is moving in the right direction, which is a nice setup as the market starts to prepare for a potential resurgence of inflation from tariffs. Even with a weaker CPI, we believe the Federal Reserve is still in wait and see mode for at least the next 6-8 months.” Peter Boockvar, chief investment officer at Bleakley Financial Group: “Bottom line, we can take a deep breath that inflation further decelerated a touch from January and was below expectations. And the rental component is still overstating the reality on the ground but I’d argue healthcare is doing the opposite. Goods price inflation continues to show signs of bottoming even before any tariffs hit. I don’t think the inflation story is over.” Elsewhere Wednesday morning on Wall Street, Morgan Stanley cut its price target on Apple , citing in part U.S. tariffs on Chinese goods. “While we believe Apple is taking actions to help mitigate tariffs, it’s unlikely that Apple can fully offset this cost without broad tariff exemptions, which have not been granted,” analyst Erik Woodring said . — CNBC’s Yun Li, Alex Harring and Sarah Min contributed reporting.
