U.S. stock markets edged higher on Friday after a sharp pullback the previous day. At the close in New York, the Dow Jones Industrial Average was at 49,501, an increase of 0.1 percent versus the prior trading day. The Nasdaq‑100 finished 24,733, up 0.2 percent, while the broader S&P 500 ended at 6,836, up 0.1 percent.
In the afternoon, U.S. inflation figures for January were released. The headline rate fell more than expected, dropping from 2.7 percent to 2.4 percent. Even after trimming out volatile energy and food prices, core inflation edged down from 2.6 percent to 2.5 percent.
Thomas Gitzel, chief economist at VP Bank, said the most noticeable feature of the U.S. inflation picture is that tariffs have not yet exerted significant pressure. He attributes this to a rise in labor productivity during the second and third quarters, with productivity increases of around five percent in each quarter according to U.S. statistics. “These productivity gains should have offset much of the tariff‑related cost pressure” he explained.
However, Gitzel warned that the higher input costs caused by tariffs may still be passed on to customers in the coming months, a view that is echoed at least by some Fed surveys. “The February‑January inflation data do not compel the Fed to take immediate action” he added.
