US STOCKS-S&P 500, Nasdaq gain as cool inflation data calms tariff jitters

By Stephen Culp

NEW YORK, March 12 (Reuters) - Wall Street advanced on Wednesday as cooler-than-expected inflation data helped stanch a sharp selloff among growth stocks, while the escalation of U.S. President Donald Trump's chaotic, multi-front tariff war kept gains in check.

The S&P 500 and the tech-heavy Nasdaq were in positive territory, the latter enjoying a muscular boost from technology shares .SPLRCT, led by microchips .SOX.

The blue-chip Dow waffled between red and green and was last modestly lower.

The Labor Department's Consumer Price Index showed consumer prices cooling more than analysts expected, providing reassurance that inflation is headed in the right direction and keeping hopes alive that the U.S. Federal Reserve could cut its key interest rate this year.

“(Equities) are higher on the expectation that the Fed could consider additional rate cuts," said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois. "But CPI is looking backward - it's last month's data - and we still don't have a good sense of what the tariffs may do to inflation."

"The tariff discussion continues to cloud confidence in investors," Nolte added.

In his latest tariff salvo, Trump imposed 25% duties on imported steel and aluminum, prompting Canada and Europe to respond in kind, ramping up their retaliatory tariffs on U.S. exports.

U.S. equities have come under pressure amid the rising temperature of tit-for-tat tariff disputes between the United States and its trading partners, rattling investors and giving rise to fears that the resulting price jolts could tip the United States, along with Canada and Mexico, into recession.

Goldman Sachs lowered its year-end target for the S&P 500, while J.P.Morgan see increasing odds of a U.S. recession.

With Wednesday's advance, the S&P 500 remains just shy of 9% below its all-time closing high reached less than a month ago. On Monday, bellwether index dipped below its 200-day moving average, considered a significant support level, for the first time since November 2023.

On March 6, the tech-heavy Nasdaq dipped more than 10% below its record closing high reached on December 16, confirming it has been in a correction since then.

The Dow Jones Industrial Average .DJI fell 63.60 points, or 0.15%, to 41,369.88, the S&P 500 .SPX gained 23.30 points, or 0.42%, to 5,595.37 and the Nasdaq Composite .IXIC gained 168.01 points, or 0.97%, to 17,604.11.

Technology shares led the gainers among the 11 major sectors in the S&P 500, while consumer staples .SPLRCS and healthcare .SPXHC were the laggards.

Intel INTC.O jumped 3.5% after a report said TSMC 2330.TW had pitched Nvidia NVDA.O, Advanced Micro Devices AMD.O and Broadcom AVGO.O about taking a stake in a joint venture to operate the U.S. chip company's factories.

PepsiCo PEP.N fell 2.3% after brokerage Jefferies downgraded its rating on the stock to "hold" from "buy."

Lawmakers on Capitol Hill continue to wrangle over a stopgap spending bill in an effort to avoid a government shutdown, adding further uncertainties to the mix.

Advancing issues outnumbered decliners by a 1.09-to-1 ratio on the NYSE. There were 22 new highs and 154 new lows on the NYSE.

On the Nasdaq, 2,471 stocks rose and 1,823 fell as advancing issues outnumbered decliners by a 1.35-to-1 ratio.

The S&P 500 posted no new 52-week highs and 18 new lows while the Nasdaq Composite recorded 21 new highs and 180 new lows.