Yahoo Finance

Inflation unexpectedly declined in March for the first time in nearly five years, the Commerce Department said on Thursday. The fresh inflation report came a day after President Donald Trump temporarily halted his tariffs on most countries, sending Wall Street on a historic rally.

Although the halt is temporary, as the White House continues negotiations with the trading partners of the United States, investor sentiment has got a much-needed boost over the past couple of seasons.

Given the positive sentiment, investing in consumer discretionary stocks would be a prudent choice. Four such stocks are American Outdoor Brands, Inc. AOUT, Carnival Corporation & plc CCL, GameStop Corp. GME and Netflix, Inc. NFLX.

Each of these stocks has seen positive earnings estimate revision in the past 60 days and carries a Zacks Rank #1 (Strong Buy) and 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inflation Declines for First Time in Years

The Commerce Department said that the consumer price index (CPI) declined 0.1% sequentially in March after increasing 0.2% in February and surpassing the consensus estimate of a rise of 0.2%. This was the first time the CPI declined since May 2020.

Year over year, CPI rose 2.4% in March after climbing 2.8% in the month earlier. Core CPI, which strips out the volatile energy and food components, rose 0.1% sequentially in March after advancing 0.2% in February, the smallest rise since June 2024.

The drop in March can be attributed to cheaper fuel and motor vehicles. Gasoline prices declined 6.3%. However, food prices rose 0.45 in March after climbing 0.3% in February. Prices of eggs, meat and fish increased, but fruits and vegetables declined.

Trump Pauses Tariffs

Wall Street rallied on Wednesday, with all three major indexes hitting record single-day gains after Trump announced a 90-day pause on tariffs. Trump’s announcement came less than 24 hours after his sweeping tariffs targeting all the countries trading with the United States went into effect.

Earlier, markets lost $6.4 trillion in four trading sessions after Trump slapped tariffs on trading partners of the United States. Although the pause is temporary, the announcement came as a major relief to investors.

Also, the White House said that the Trump administration has started trade talks after more than 50 countries approached to negotiate. This could ease the trade war over the coming days, which could boost the markets.

Also, if inflation continues to show signs of cooling, the Federal Reserve is expected to resume its rate cuts in the coming months, which will benefit the broader market.