Dow and S&P slip on rising trade tensions; Groupon shares jump 35%, while airline stocks continue fall

Investors continued to be rattled by escalating tensions between the US and its key trade partners, causing the Dow Jones Industrial Average to fall further on Wednesday.

The blue-chip index experienced a decline of 364 points, representing a 0.8% drop at the time of writing.

The Nasdaq Composite rose 0.3%, while the S&P 500 declined 0.3% from the previous close.

The US Consumer Price Index (CPI) increased by 0.2% in the reported month, resulting in an annual inflation rate of 2.8%.

This was below the Dow Jones estimates of 0.3% monthly and 2.9% annually.

Core CPI, which excludes food and energy prices, also rose by 0.2% for the month and 3.1% for the year, both below expectations.

The CPI report eased concerns that President Donald Trump's volatile trade policy would lead to stagflation, which contributed to the recent sell-off. 

The report also fueled hopes that the Federal Reserve could cut rates again later this year if necessary.

“Markets have been rocked by President Trump’s tariffs,” said David Morrison, senior market analyst at Trade Nation. 

Investors are finding it difficult to stay informed due to the numerous postponements, exceptions, and retaliations that have arisen in response to the newly imposed 25% levies on US imports of aluminium and steel. 

These levies expand upon existing tariffs already affecting Canada, Mexico, and China.

Morrison added:

Airline stocks continue to fall

Airline stocks experienced a significant decline on Wednesday, following cautionary statements from major carriers Delta Airlines, American Airlines, and Southwest Airlines. 

These airlines expressed concerns that a weakening economic environment could potentially dampen domestic travel demand. 

This announcement triggered a sell-off in the airline sector, as investors reacted to the possibility of lower profits and revenue for airlines in the coming months. 

The downturn in airline stocks reflects broader concerns about the health of the economy and the potential impact of economic headwinds on various industries.

At the time of writing, shares of Delta Air Lines were down nearly 5%, while those of United Airlines slipped more than 6%. 

American Airlines also slumped more than 4.4% on Wednesday. 

Semiconductor ETF 

The VanEck Semiconductor ETF (SMH) was up 3.6% on Wednesday, putting it on track for its first gain in three sessions.

The exchange traded fund had its best day since September 19, 2024, when it rose 4.3%. 

Despite this, the fund is still expected to close the week down 1.5%, marking its fourth consecutive week of losses.

Intel jumps

Intel's stock price experienced a significant surge, increasing by 8%, following a report from Reuters. 

The report detailed a proposal from Taiwan Semiconductor Manufacturing Company (TSMC) directed towards major US chipmakers NVIDIA, Advanced Micro Devices (AMD), and Broadcom. 

The proposal suggested the formation of a joint venture to oversee and manage Intel's foundry division. 

This potential collaboration hints at a significant shift in the semiconductor industry landscape, with implications for Intel's strategic direction and market positioning.

However, the stock gave up most of its gains from earlier in the day, and was up 2.3% at the time of writing. 

Groupon Inc jumps

Groupon's shares experienced a surge of nearly 35% following the release of their full-year revenue guidance, which surpassed the expectations of market analysts. 

The e-commerce marketplace projected full-year revenue to fall within the range of $493 million to $500 million. 

This forecast exceeded the consensus estimate of $491.5 million, as predicted by analysts surveyed by FactSet. 

The better-than-expected guidance has instilled confidence among investors, leading to a positive market reaction and a significant increase in Groupon's share price.