Stock market rebounds on cooler inflation data
US stock indexes mostly rose on Tuesday following a positive consumer inflation report. April’s Consumer Price Index showed prices easing, calming fears stoked by recent Trump tariff moves.
The S&P 500 gained 1%, putting it on track to close positive for 2025—a dramatic rebound from last month’s lows.
Tech stocks lead new bull market surge
The tech-heavy Nasdaq Composite jumped nearly 2% as it continued a new bull run. Leading the stock rally was Nvidia, which once again hit a $3 trillion market cap.
Other major tech stocks, including Tesla and Meta, also posted strong gains—up 5% and 3% respectively. Investors are clearly regaining confidence in AI and digital innovation amid easing trade war concerns.
Dow slips as UnitedHealth stock dives 18%
While tech led the rally, the Dow Jones Industrial Average fell 0.4%, dragged down by stock losses in UnitedHealth. The healthcare giant saw its shares plunge over 18% after CEO Andrew Witty’s unexpected resignation.
UnitedHealth also suspended its 2025 outlook, adding more pressure to the Dow’s performance for the day.
Tariff truce fuels investor optimism in stocks
Markets responded positively to signs of a U.S.-China trade truce. President Trump’s fluctuating stance on tariffs had recently rattled stock traders, but the latest developments brought a sigh of relief.
Inflation has now reached its slowest pace since 2021. As trade tensions ease, confidence in equities is rising again—especially in sectors hit hardest by prior uncertainty.
Bond market shifts expectations for Fed action
The inflation report also influenced bond markets. Traders now expect the first 0.25% Federal Reserve rate cut to come in September, not June.
This shift in monetary policy expectations added fuel to the stock market’s bullish sentiment. The 10-year Treasury yield spiked to 4.5%, its highest level in more than a month.
Corporate America braces for tariff fallout
Despite the improving mood, some companies are still sounding alarms. Honda warned of a $3 billion hit to annual profit due to new auto tariffs from Trump’s administration.
Even with a strong day for stock prices, many sectors remain cautious about what’s next in U.S. trade policy.
Stock market outlook hinges on policy clarity
For now, investors are optimistic. Tech leadership and cooling inflation have renewed momentum in the stock market. However, risks remain tied to Fed policy and unresolved trade issues.
If economic data continues to improve, stock prices could climb further. But any surprise from tariffs or rate hikes could spark renewed volatility.
As traders weigh inflation trends and Trump’s policy shifts, the stock market is entering a critical phase—defined as much by politics as by earnings.