Wild markets driven by trade tensions and inflation data; major moves in tech
The financial markets had another wild week, driven by inflation data, trade tensions, and major moves in tech and auto industries.
Inflation Worries Continue
One of the biggest concerns for investors is inflation—how fast prices are rising. The Federal Reserve’s preferred inflation measure, the core PCE price index, came in at 2.8% for February, slightly higher than expected. This makes it less likely that the Fed will cut interest rates soon, which investors were hoping for. Higher inflation can slow down stock market growth because it makes borrowing more expensive and reduces consumer spending power.
Trade Tensions Shake Markets
President Trump announced a 25% tariff (a tax on imports) on foreign-made cars, and there’s potential for more trade restrictions. Canada has already said it will respond with its own tariffs. This uncertainty has made investors nervous, causing stock market volatility (big price swings). Trade wars can hurt businesses by making goods more expensive and slowing down economic growth.
Gold Hits Record High
When markets get shaky, investors often look for “safe haven” assets like gold. This week, gold hit an all-time high of $3,080 per ounce, as more people bought it to protect their money from inflation and economic uncertainty. Some analysts expect gold to keep rising, possibly reaching $3,300 by the end of 2025.
Big Moves in the EV Market
China’s electric vehicle (EV) giant, BYD, surpassed Tesla in sales, bringing in $107 billion in revenue last year. Meanwhile, Tesla’s sales in Europe dropped 43%. This is a major shift in the EV industry, showing that competition is heating up, especially with newer battery technology.
Tech Stocks in the Spotlight
- CoreWeave IPO – This AI-focused cloud computing company went public at $39 per share, marking the biggest U.S. tech IPO since 2021.
- Perplexity AI’s Growth – The AI-powered search company reached $100 million in annual revenue in just 20 months, showing strong demand for AI-driven services.
- Elon Musk’s xAI Merger – Musk merged his AI company, xAI, with his social media platform, X (formerly Twitter), in a $33 billion deal to compete with major tech players.
What Does This Mean for Investors?
- Be Mindful of Inflation: Higher inflation can impact stocks, so keep an eye on Fed decisions regarding interest rates.
- Watch Trade Policies: Tariffs can affect industries like autos, tech, and manufacturing, which may influence stock prices.
- Consider Diversification: Safe-haven assets like gold can be a hedge during uncertain times.
- Look at Long-Term Trends: AI and EVs continue to grow rapidly—investors interested in these sectors should research potential opportunities.