As tariff tensions simmer, investors fixate on Wednesday's inflation data, seeking clues to the Fed's next move and whether the market's dip is a fleeting stumble or a sign of deeper trouble.

Will Inflation Fears Derail the Bull Run? Stocks Brace for CPI Showdown

The market's narrative hangs in the balance, caught between trade war tremors and the looming specter of inflation. All eyes are now on Wednesday's Consumer Price Index (CPI) report, which could dictate the Federal Reserve's next policy pivot and either validate or obliterate the current market optimism.

Stock futures are on edge, cautiously optimistic, as investors brace for a crucial consumer inflation report amidst the din of President Trump's newly enacted tariffs on steel and aluminum. Will the data fan the flames of inflation fears, or offer a soothing balm to jittery markets?

• Futures tied to the Dow Jones Industrial Average are up 93 points, a modest 0.22% climb.
• S&P 500 futures are showing slightly more vigor, rising 0.29%.
• The tech-heavy Nasdaq 100 futures lead the pack with a 0.33% gain.

Tariff Tango: A Volatile Prelude

Tuesday was a rollercoaster, with tariff announcements triggering a steep market plunge. The S&P 500 momentarily dipped 10% from its recent high. The Dow closed down nearly 480 points (1.1%), and the Nasdaq Composite posted a roughly 0.2% decline.

The day's drama unfolded with President Trump initially doubling import duties on Canadian steel and aluminum to a staggering 50%, a retaliatory measure against Ontario's electricity export levy. But wait! Ontario Premier Doug Ford quickly paused the surcharge, and White House trade advisor Peter Navarro later clarified that Trump would not raise the Canadian tariffs to 50%. Yet, the original 25% duty remains in effect.

CPI: The Main Event

Economists predict a 0.3% rise in the CPI for February, with headline inflation hitting 2.9% year-over-year. These numbers will either confirm or quell growing anxieties about inflation and slowing economic growth.

The CPI reading will be a critical factor in shaping the Federal Reserve's upcoming policy decisions.

Warren Pies, co-founder of 3Fourteen Research, cautions:

"We're just waiting on some kind of policy response, either from the Fed or the administration... I think that's going to be a little bit slow coming. And so I don't think it's time to buy the dip just yet."

After-Hours Movers: A Glimpse of Hope?

Despite the overall uncertainty, some stocks are making notable moves after hours:

• Groupon: Soaring nearly 7% on better-than-expected full-year revenue guidance, forecasting $493 million to $500 million against analysts' expectations of $491.5 million.
• Heritage Insurance Holdings: Slipping 4% after net income declined to 66 cents per diluted share, down from $1.15 per share year-over-year.
• Casey's General Stores: Surging 3% as fiscal third-quarter results beat estimates, reporting earnings of $2.33 per share on revenue of $3.90 billion, versus expectations of $1.96 per share and $3.73 billion.

The Waiting Game: Futures Tread Water

Earlier Tuesday, stock futures showed little movement as investors braced for the CPI report.

• S&P 500 futures gained a mere 0.13%.
• Nasdaq 100 futures edged up 0.17%.
• Dow Jones Industrial Average futures added a meager 37 points (0.09%).

The market's next direction hinges on the inflation data. Will it trigger a buying frenzy, or confirm fears of an impending correction? Only time will tell.