Stocks Rise After Tumult, but Investors Remain Wary of Trade Tensions

Wall Street struggled to find a direction on Wednesday after a tumultuous few days of trading, as investors weighed lower-than-expected inflation data against concerns about President Trump’s tariff policies.

The S&P 500 index rose at the start of trading, buoyed by data from the Bureau of Labor Statistics showing that inflation eased in February. But the initial rally faded as trade tensions took center stage, briefly pulling the benchmark index into the red. By midday, it had rebounded again, rising 0.7 percent, while the technology-heavy Nasdaq Composite index was roughly 1.5 percent higher.

The rise in stock prices reversed some of the losses from earlier in the week and came after another turbulent trading day on Wall Street, when the White House introduced and then rolled back some of its tariffs. The whipsaw on trade policy has added to investors’ confusion over the Trump administration’s economic plans, and the path ahead on interest rates set by the Federal Reserve.

Global trade turmoil intensified on Wednesday as Mr. Trump’s across-the-board tariffs on steel and aluminum imports took effect, and the European Union and Canada responded with billions of dollars in retaliatory tariffs on U.S. exports.

Recent waves of selling had pushed the S&P 500 index down nearly 10 percent below its mid-February record. Falling more than 10 percent would signify a symbolic milestone known on Wall Street as a correction.

The Euro Stoxx 50 index, which comprises the eurozone’s largest listed companies, was up more than 1 percent on Wednesday. Shares in Britain, Germany and France all broadly gained.

In Asia, stock markets in Japan, South Korea and Taiwan nudged higher. Those indexes were seen as among the most exposed if President Trump broadened tariffs on longstanding trading partners. Hong Kong’s Hang Seng Index, a market that had been a bright spot in Asia, fell nearly 1 percent, a fourth straight day of decline.

As Asian and European markets seemed to regain their footing on Wednesday, the European Union said it was implementing tariffs in retaliation to Mr. Trump’s 25 percent duty on steel and aluminum imports, which went into effect earlier in the day.

The European Commission called the U.S. tariffs on steel and aluminum “unjustified.” It said it would impose levies on a wide range of American goods that would take effect on April 1. Ursula von der Leyen, the president of the European Commission, said the tariffs were nearly equal in value to the metals duties being applied by the Trump administration.

“Uncertainty breeds volatility,” said Alan McKnight, chief investment officer at Regions Bank. “Right now the level of uncertainty continues to ratchet up.”

The CBOE’s Vix volatility index, known as Wall Street’s fear gauge, has risen in recent days, a sign of investor jitters.

“Investors are having a tough time discerning what they should expect on a go-forward basis,” Mr. McKnight said. “It’s not just about it being good or bad. It’s about getting some clarity.”

The volatility is extending to how foreign investors are moving money in and out of markets in Asia. Khoon Goh, head of Asia Research at Australian bank ANZ, said foreign investors are turning “cautious” because of uncertainty regarding U.S. trade policy.

“Rising investor concerns over the impact of tariffs on U.S. growth is spilling over into Asian equities,” Mr. Goh wrote in a report.

Shares in Australia fell for a second straight day after the White House ruled out any exceptions or exemptions on its steel and aluminum tariffs. Last month, Mr. Trump said he would give “great consideration” to exempting Australia because it buys more goods from the United States than it sells. During Mr. Trump’s first term, he exempted Australia from steel and aluminum tariffs.

Anthony Albanese, Australia’s prime minister, said he would not impose reciprocal tariffs because they would only hurt Australian consumers by pushing up prices. But he condemned tariffs as an economic policy, calling them “a form of economic self-harm and a recipe for slower growth and higher inflation.”