Stocks ended mixed Tuesday, with the S&P 500 surged back into the green as investors reacted to the latest inflation report and an easing in US-trade tensions.
The Dow Jones Industrial Average lost 269.67 points, or 0.64, to finish the session at 42,140.43, the S&P 500 advanced 0.72% to close at 5,886.55 and the tech-heavy Nasdaq jumped 1.61% to end at 19,010.08.
Nvidia gained 5.6% on news that the tech giant would send 18,000 of its top artificial intelligence chips to Saudi Arabia.
“The stock market staged a big relief rally after Treasury Secretary Scott Bessent announced a 90-day reduction in tariffs between China and the U.S.,” said Louis Navellier, chairman and founder of Navellier & Associates. “It will be interesting to see how these 90-day tariff reductions impact trade, since there is an inventory glut after trade “dumping” in the first quarter."
He noted that China’s manufacturing output continues to sputter, "so the U.S. still has leverage in these ongoing trade negotiations.”
Updated at 9:36 AM EDT
Mixed open
The S&P 500 was marked 2 points, or 0.03% higher in the opening minutes of trading, with the Nasdaq rising 40 points, or 0.23%
The Dow fell 150 points while the Russell 2000 gained 12 points, or 0.58% following the softer-than-expected April inflation data.
"The downside surprise in the CPI doesn’t mean tariffs aren’t impacting the economy, it just means they aren’t showing up in the data yet," said Ellen Zenter, chief economic strategist for Morgan Stanley Wealth Management.
"Wait-and-see is still the name of the game, and until that changes, the Fed will remain on the sidelines," she added.
Updated at 8:42 AM EDT
Easing, for now ...
U.S. consumer price inflation eased again last month, suggesting little impact from President Donald Trump's tariff regime heading into the start of the second quarter.
The Commerce Department said its headline Consumer Price Index for April was pegged at an annual rate of 2.3%, down from the 2.4% pace recorded in March and the consensus forecast from analysts on Wall Street.
So-called core inflation, which strips out volatile components like food and energy, held at an annual rate of 2.8%, matching both the Wall Street forecast and March's 2.8% pace.
stocks pared some of their earlier declines following the data release, with futures contracts tied to the S&P 500 indicating an opening-bell gain of around 10 points and the Nasdaq priced for a 90-point gain.
The Dow was called 90 points lower thanks in part to the 9% slump for index heavyweight UnitedHealth Group (UNH) .
Stock Market Today
Stocks ended firmly higher on Monday with the S&P 500 rising 3.26%, its strongest single-day gain in six weeks, following a weekend deal between the U.S. and China to pause reciprocal tariffs for at least three months.
The benchmark also closed north of its 200-day moving average, a key performance indicator, for the first time since March.
The Nasdaq, meanwhile, rose 4.35% to lift the tech-centered index into bull-market territory just a month after it booked a 20% bear-market slump from its late-December peak.
Global investors cheered the agreement, which could act as a template for U.S. trade talks with other countries over the coming weeks,
"Looking ahead, US-Japan trade negotiations remain stuck as Japan refuses to accept any deal that lacks sector-specific exemptions," said George Vessy, lead foreign-exchange strategist at Convera.
"South Korea has completely abandoned the prospect of a trade agreement before the country’s presidential election on June 3," he added. "Meanwhile, in the eurozone, officials are assembling a package of retaliatory tariffs targeting $100 billion worth of US industrial goods. So, this may be as good as trade policy gets, at least for now."
Fed Chairman Jerome Powell and his colleagues will be firmly fixed on April inflation data as the impact of tariffs bleeds into the U.S. consumer economy.Alex Wong/Getty Images
Bets on avoiding recession increase
Investors also laid bets that the domestic economy will avoid recession this year as a result, with Goldman Sachs reducing those odds to around 35%.
That lifted U.S. Treasury bond yields, which move in the opposite direction of prices, and put an even greater focus on today's April inflation report from the Commerce Department.
Analysts expect headline price pressures jumped 0.3% last month, with the annual rate holding at 2.4%, as tariff hikes bled into U.S. consumer goods and offset a pullback in energy costs and egg prices.
Benchmark 2-year Treasury note yields, which are highly sensitive to interest rate changes, surged 12 basis points yesterday and were holding at around 3.981% heading into today's April Consumer Price Index report at 8:30 a.m. U.S. Eastern Time.
The U.S. dollar index, meanwhile, pared some of yesterday's 1.5% gains and was last marked 0.21% lower at 101.542.
On Wall Street, stocks are set for a muted open, with futures contracts tied to the S&P 500 indicating a 16 point pullback and the Dow Jones Industrial Average priced for a 60 point decline.
The tech-focused Nasdaq, meanwhile, is called 80 points lower with Nvidia (NVDA) , Tesla (TSLA) and Coinbase (COIN) , which last night was selected for inclusion into the S&P 500, active in premarket trading.
In overseas markets, Europe's Stoxx 600 slipped 0.21% in midday Frankfurt trading, with Britain's FTSE 100 edging just a few points higher in a tepid London session.
Overnight in Asia, Japan's Nikkei 225, which missed out of yesterday's China-deal rally, rose 1.43% to close at a three-month high, while profit-taking pulled the regional MSCI ex-Japan benchmark 0.24% lower by the end of the session.
