The S&P 500 and Nasdaq closed higher on Monday. This was driven by encouraging inflation data and optimism about ongoing trade talks. The Dow Jones Industrial Average was down 0.64%.
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The S&P 500 was up 0.72%. The Nasdaq Composite was up 1.61%. The S&P 500 turned positive for the year-to-date.
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This was the first time in two months. The gains were helped by the latest inflation data. April’s Consumer Price Index (CPI) was 2.3% year-over-year.
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This was slightly below the estimated 2.4%. Coinbase shares soared. This was after its addition to the S&P 500.
UnitedHealth shares tumbled. The company announced it was suspending its forecast. Its CEO also resigned.
Tesla’s board has formed a special committee. They will review CEO Elon Musk’s pay. This could result in a new stock options package, the Financial Times reported.
The Dow Jones Industrial Average closed lower by 270 points, or 0.64%. The broader S&P 500 rose 0.72%. The tech-heavy Nasdaq Composite gained 1.61%.
For the year, the Dow is still down 0.95%. The Nasdaq Composite is down by 1.56%.
Trade optimism fuels market rebound
A big boost to the market came on Monday. Washington and Beijing reached an agreement. They will lower tariffs for 90 days.
Stocks rose further on Tuesday. New data from the Bureau of Labor Statistics showed a surprising cooldown in annual inflation. Consumer prices in April had their lowest annual increase since February 2021.
Stocks have been rallying for the past month. President Donald Trump began reconsidering tariffs. He announced carve-outs for some tariffs on China.
There is also potential for new trade deals. “Fears of slowing growth and a recession caused by punitive tariffs drove markets lower in the first week of April. They have rebounded on the heels of a tariff pause and a Chinese trade breakthrough.
Now, a better-than-expected inflation report removes the last big overhang for the market,” said Chris Zaccarelli. He is the chief investment officer at Northlight Asset Management. Nvidia surged 5.63% on Tuesday.
The chip giant announced it would partner with Saudi Arabia on artificial intelligence initiatives. The Dow was the only index that fell on Tuesday. It was largely weighed down by UnitedHealth Group.
UnitedHealth sank 17.8% after suspending its earnings guidance. CEO Andrew Witty announced he would step down for personal reasons. UnitedHealth’s big influence on the index contributed to the Dow’s performance.
In summary, easing trade tensions and a cooler-than-expected inflation report have contributed to a dramatic rebound in the stock market. The S&P 500 erased all of its losses for the year.