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The Nasdaq Composite Index surged 2.27%, while the Dow and the S&P 500 rose 1.42% and 1.76%, respectively. Hopes for less aggressive tariffs eased concerns about rising import costs, inflation pressures, and the Fed’s rate path. In the bond markets, 10-year US Treasury yields jumped to their highest level since February 25, reflecting improved market sentiment.
US Services PMI Signals Economic Resilience
The S&P Global Services PMI unexpectedly rose from 51.0 in February to 53.2 in March. Accounting for around 80% of US GDP, the upswing pointed to a resilient US economy, easing recession fears.
According to the March survey, input costs increased at the fastest pace for 18 months, pushing selling prices higher. Service providers also expanded hiring. Higher inflation and rising employment could temper multiple Fed rate cut bets. However, easing market concerns about the US economic outlook offset fears of fewer 2025 Fed rate cuts.
Chief Business Economist at S&P Global Market Intelligence commented:
“Thankfully, from the Federal Reserve’s perspective, services inflation remains relatively subdued, but this reflects the need to keep prices low amid weak demand, which will harm profits.”
Asian Market Implications: Asian markets opened mixed on Tuesday, March 25, as traders processed developments from the US.
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