March CPI Is Out: What to Watch?

February's CPI report, released on March 12, 2025, revealed inflation at 2.8% the lowest in two years.

The market didn’t just react, it exploded.

When inflation moves, everything from mortgage rates to stock portfolios is impacted.

Trillions of dollars shift in seconds.

This is the key to making bold, profitable moves.

And if you know how to read the CPI report, you can get ahead of the market, not just react to it.

CPI's Impact on Markets

CPI tracks the average price consumers pay for everything food, housing, energy, transportation.

It’s the ultimate measure of purchasing power.

Rising CPI leads to higher interest rates, expensive borrowing, and squeezed growth stocks.

Falling CPI signals lower rates, cheaper borrowing, and soaring growth stocks.

For example, when inflation spikes, the Fed steps in to control it by raising rates.

This impacts everything higher rates mean consumers and businesses borrow less, spending decreases, and stock prices often fall, especially for growth stocks.

On the flip side, when inflation cools, like it did in February, the Fed cuts rates.

This gives a boost to stocks, particularly in sectors like tech.

In February’s report, we saw CPI at 2.8%, and core CPI at 3.1%.

The immediate market reaction?

S&P 500 up 0.49%, Nasdaq surged 1.9%, and tech giants like Microsoft saw a 4.2% jump in a single day.

This is a prime example of how falling inflation gives the market a shot of adrenaline.

Inflation Spike? Play Defense

When CPI rises, the Fed usually raises rates to slow down the economy.

Borrowing becomes more expensive, consumer spending drops, and sectors tied to economic growth can struggle.

This is where defensive sectors like utilities and consumer staples come into play.

Utilities are the ultimate defense against inflation.

People always need electricity, water, and natural gas, no matter the economy.

These companies have stable demand, pricing power, and reliable dividends. Take NextEra Energy (NEE) for example.

During the 9.1% inflation spike in 2022, NEE outperformed the S&P 500 by 12%.

Similarly, American Water Works (AWK) thrives due to its ability to pass along inflation-related costs to customers, and The Southern Company (SO) has a 49-year history of consistent dividends.

Even the XLU ETF, which tracks the utilities sector, lost only 1.4% in 2022, while the S&P 500 dropped 19.4%.

Consumer Staples are also resilient during inflation.

Items like toothpaste, toilet paper, and soda stay in demand, regardless of economic conditions.

Companies like Procter & Gamble (PG) raised prices by 10% during the 2022 inflation spike and still grew sales by 7%.

Coca-Cola (KO) has raised its dividend for 61 straight years, proving it can weather price hikes.

Walmart (WMT) thrives by attracting budget-conscious shoppers, especially when prices rise.

The XLP ETF, which tracks the consumer staples sector, beat the S&P 500 by over 17% in 2022.

Inflation Falls? Time to Go Big on Growth

When CPI falls, the game changes.

Lower inflation usually triggers lower interest rates, making borrowing cheaper and giving a boost to growth stocks.

This is when you want to go all-in on tech and electric vehicle (EV) stocks.

Tech stocks are the stars when inflation falls.

Lower rates reduce the cost of capital, fueling innovation and expansion.

Microsoft (MSFT), for example, saw its stock rise 4.2% after the February CPI release.

Lower rates make its cloud investments and research and development more affordable, leading to higher valuations.

Nvidia (NVDA), another tech giant, surged 7% post-CPI, as its AI chip production becomes more profitable with cheaper borrowing costs.

Amazon (AMZN) also benefitted, rising 4.8% after the CPI report, as lower rates support its massive logistics network.

The QQQ ETF, which tracks the Nasdaq, soared 2.1% within 24 hours of the February CPI report.

EV stocks also see big gains when inflation falls.

Building factories and expanding production is capital-intensive, and lower rates make it easier to borrow billions.

For example, Rivian (RIVN) surged 9% after the February CPI report, despite reporting a $1.5B quarterly loss.

But with lower rates, expansion becomes cheaper.

Tesla (TSLA) also saw a 6.2% jump as its gigafactory growth accelerated with the prospect of lower rates.

The DRIV ETF, which tracks the electric vehicle sector, gained 3.7% in just one day after the February CPI report.

Your CPI Strategy

To profit from these CPI trends, you need a systematic approach.

A week before the CPI release (usually around the 10th-15th of each month), check the forecast, track expert predictions, and prepare your watchlist.

Divide your stocks into two categories: defensive stocks for high CPI and growth stocks for low CPI.

After the CPI report drops, act decisively.

If inflation rises, load up on utilities like NEE and consumer staples like PG.

If inflation falls, as it did in February, go big on tech stocks like MSFT and EV companies like RIVN.

CPI isn’t just noise it’s your ultimate investment compass.

Most investors wait for the market to react. However, it is better to position yourself to capitalize on these shifts before anyone else.

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Disclaimer: This newsletter is for educational purposes only and should not be considered financial advice. Always conduct your own thorough research before making any investment decisions.