Most US stocks climbed on Tuesday following a promising
inflation report that showed price pressures unexpectedly eased across the country in April, giving fresh momentum to a market already buoyed by optimism over US-China trade developments.
The
S&P 500 rose 0.8% in midday trading, building on Monday’s strong performance after the United States and China agreed to a 90-day pause in their tariff dispute to allow for further negotiations. The
Nasdaq composite gained 1.6%, powered by strength in artificial intelligence and technology stocks, while the
Dow Jones Industrial Average lagged, down 152 points, or 0.4%, as of 11:30 a.m. Eastern.
The rally helped the S&P 500 erase its year-to-date losses, recovering nearly 20% from its recent lows and moving within 4.1% of its all-time high set in February. The index, a key component of many retirement portfolios, has rebounded amid expectations that the administration may ease tariffs to prevent a deeper economic slowdown and inflationary surge.
Tuesday’s inflation data offered relief to markets. The consumer price index rose 2.3% in April compared to a year earlier, down from 2.4% in March. It was a welcome sign for investors worried about the toxic mix of high inflation and stagnant growth — a scenario economists call “stagflation.”
“It’s encouraging because such data pulls the economy further from a worst-case scenario called ‘stagflation,’” the report noted. “The Federal Reserve has no good tools to fix the toxic combination. It could try to lower rates to help the economy, for example, but that would likely lead to worse inflation in the short term.”
Despite the good news, analysts cautioned that the impact of ongoing tariffs could still push inflation higher in the months ahead, keeping the Federal Reserve in a wait-and-see mode.
“It’s similar to the wait that investors in general are enduring,” said Alexandra Wilson-Elizondo, global cohead and co-chief investment officer of multi-asset solutions at Goldman Sachs Asset Management. “With the Fed set to make no moves on interest rates for the time being, markets will likely trade ‘with negotiation and reconciliation headlines.’”
Louis Wong, director for Phillip Securities Group in Hong Kong, echoed the sentiment. “I think investors are aware that the trade deal is not done yet,” he said. “I would advise investors to remain cautious in the near term and to be prepared for unexpected news from the trade front.”
On
Wall Street, Coinbase Global surged 19.2% after it was announced that the cryptocurrency exchange will be added to the S&P 500 index next week, replacing Discover Financial Services, which is being acquired by Capital One Financial.
AI stocks also led the charge. Nvidia gained 5.5%, acting as the largest contributor to the S&P 500’s advance. Super Micro Computer jumped 13%, GE Vernova added 5.6%, and Palantir Technologies climbed 7.3%.
The strength in tech and AI helped offset a sharp drop in
UnitedHealth Group shares, which plunged 16.1% after the insurer suspended its full-year forecast due to unexpectedly high medical costs. The company also announced that CEO Andrew Witty would step down for personal reasons, with Chairman Stephen Hemsley set to take over as CEO immediately.
UnitedHealth's decline was the primary reason for the Dow's underperformance.
In the bond market, Treasury yields rose slightly on optimism about the economy. The 10-year Treasury yield inched up to 4.48% from 4.45%, while the two-year yield, which more closely tracks expectations for Fed policy, ticked up to 4.00% from 3.98%.
Overseas, market performance was mixed. Tokyo’s Nikkei rose 1.4%, with automakers among the top gainers. Nissan Motor Co. added 3% ahead of plans to lay off 20,000 workers as part of its restructuring efforts. The company reported a loss of 670.9 billion yen ($4.5 billion) for the previous fiscal year.
Shanghai stocks, by contrast, dropped 1.9% as profit-taking hit Chinese markets.