U.S. stock markets moved mostly higher on Tuesday after a surprising report showed inflation slowed more than expected last month, giving investors some relief.
The S&P 500 rose 0.9% in afternoon trading, adding to Monday’s strong gains following news of a 90-day trade war truce between the U.S. and China. The Nasdaq jumped 1.7% as AI and tech stocks continued to lead the way. However, the Dow Jones Industrial Average was down about 193 points (0.5%) around midday due to a sharp drop in UnitedHealth shares.
Markets have been climbing back steadily since the S&P 500 flirted with bear market territory last month. Hopes are growing that President Donald Trump might ease tariffs before they cause deeper economic problems or push inflation even higher. As a result, the S&P 500 is now just 4% below its all-time high and has erased losses from earlier this year.
Tuesday’s inflation report showed consumer prices rose 2.3% in April—down from 2.4% in March—despite trade tensions and companies racing to import goods before tariffs kick in. This is seen as a positive sign, moving the U.S. economy further away from the risk of “stagflation,” a worst-case scenario where growth stalls but inflation remains high.
Still, analysts warn that inflation could creep up again in the coming months due to ongoing tariffs. This uncertainty is likely to keep the Federal Reserve cautious and waiting for more data before making decisions about interest rate cuts.
Market behavior will continue to be heavily influenced by headlines around trade negotiations, according to analysts at Goldman Sachs Asset Management. Alexandra Wilson-Elizondo said investors are aware that the trade dispute isn’t resolved yet. Louis Wong from Phillip Securities added that people should stay cautious and be ready for sudden developments on the trade front.
Among the top gainers on Wall Street was Coinbase Global, which surged 23% after news that it will be added to the S&P 500 index next week, replacing Discover Financial Services. Discover is being acquired by Capital One.
Tech and AI stocks also saw big moves:
-
Nvidia jumped 6.2%, driving the S&P 500 higher.
-
Super Micro Computer surged 13.7%.
-
GE Vernova, tied to powering AI data centers, rose 6.5%.
-
Palantir Technologies added 9.4%.
However, UnitedHealth Group dragged down the Dow. Its shares plunged 15.8% after the company pulled its full-year financial forecast, citing higher-than-expected medical costs. CEO Andrew Witty stepped down for personal reasons, and Chairman Stephen Hemsley stepped back in as CEO.
In the bond market, Treasury yields rose slightly on optimism about the economy:
-
The 10-year Treasury yield climbed to 4.49%, up from 4.45%.
-
The 2-year yield, closely tied to Fed expectations, rose to 4.02% from 3.98%.
Overseas, stock indexes were mixed:
-
Tokyo’s Nikkei rose 1.4%.
-
Shanghai’s index dropped 1.9%.
Japanese automakers stood out, with Nissan gaining 3% after announcing it would cut 20,000 jobs as part of a restructuring plan. The company also reported a loss of 670.9 billion yen (about $4.5 billion) for the last fiscal year.
