People walk down Wall Street in New York City. Photo credit: Michael Nagle, Bloomberg.
U.S. stock markets saw another day of gains on Tuesday, with the S&P 500 officially erasing its losses for the year. The climb came after a promising report revealed that inflation unexpectedly slowed last month, lifting investor confidence.
The S&P 500 rose 0.7%, building on momentum from earlier in the week after the U.S. and China agreed to a 90-day break in their trade tensions. The tech-heavy Nasdaq surged 1.6%, driven largely by gains in artificial intelligence stocks. However, the Dow Jones Industrial Average dipped 269 points, or 0.6%, mainly due to a steep drop in UnitedHealth Group shares.
Recent optimism in the markets has been fueled by hopes that President Trump might pull back on tariffs before they trigger a full-blown recession. These trade concerns had earlier dragged the S&P 500 close to a bear market. But now, with the index just 4.2% away from its all-time high, investors are feeling a sense of relief.
Adding to the positive sentiment was Tuesday’s inflation report, which showed a slight dip in consumer prices. Inflation eased to 2.3% in April, down from 2.4% in March, despite companies rushing to import goods before tariffs take effect. This slowdown provides some buffer against the threat of “stagflation” — a dreaded mix of stagnant growth and high inflation.
Still, analysts remain cautious. Many believe that rising costs from tariffs could keep inflation elevated in the coming months. As a result, the Federal Reserve is expected to hold off on any immediate changes to interest rates and wait for more data before taking action.
Experts warn that markets will likely stay reactive to trade news. “Investors know the trade deal isn’t final yet,” said Louis Wong of Phillip Securities Group in Hong Kong. “They should stay alert and ready for surprises.”
Among the standout performers was Coinbase Global, which soared 24% after being tapped to join the S&P 500 index. This move will push many investment funds to include Coinbase in their portfolios starting next week. It will replace Discover Financial, which Capital One is acquiring.
Tech stocks, especially those involved in AI, posted strong gains. Nvidia jumped 5.6% as it gears up to ship 18,000 chips to Saudi Arabia for a large-scale data center, in partnership with AI startup Humain. Super Micro Computer, a company that builds servers for AI applications, rallied 16%. GE Vernova and Palantir Technologies also posted gains of 4% and 8.1%, respectively.
Meanwhile, UnitedHealth Group shares plummeted nearly 18% after it suspended its yearly outlook, citing higher-than-expected medical expenses. The surprise resignation of CEO Andrew Witty also rattled investors. Chairman Stephen Hemsley will now take over as CEO.
Despite the Dow’s decline, the broader market remained strong. The S&P 500 closed at 5,886.55, up 42.36 points. The Nasdaq gained 301.74 points to reach 19,010.08. However, the Dow ended the day at 42,140.43, dragged down by UnitedHealth’s slump.
In the bond market, yields inched up, reflecting optimism about the economy. The 10-year Treasury yield rose to 4.48%, while the two-year yield ticked up to 4.01%.
Global markets mostly rose. European stocks closed higher, and Tokyo’s Nikkei gained 1.4%. However, Hong Kong's Hang Seng dropped 1.9%, partly due to local concerns. Japanese automaker Nissan jumped 3% despite announcing a $4.5 billion loss and a plan to lay off 20,000 workers in a major restructuring move.
