The stock market rallied on Tuesday, with the S&P 500 jumping 0.7% to wipe out its losses for 2025. The tech-heavy Nasdaq Composite surged 1.8%, entering a new bull market. However, the Dow Jones Industrial Average slid 0.6%, weighed down by a plunge in UnitedHealth shares.
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Nvidia powered the tech-led rally, with its stock gaining nearly 6% amid positive trade news. Other tech giants, including Tesla and Meta, also saw significant gains of about 5% and 3%, respectively.
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The Consumer Price Index report for April showed the slowest annual inflation rate since 2021, easing concerns about price hikes following recent tariff implementations.
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Market expectations for a Federal Reserve rate cut have shifted, with traders now pricing in a potential 0.25% cut in September instead of June. The benchmark 10-year Treasury yield hit its highest level in over a month, around 4.5%. Major companies continue to brace for the impact of tariffs.
Nvidia drives tech stock gains
Honda warned about the potential hit to its full-year profit due to new auto duties. UnitedHealth faced a rough session, announcing a 12% drop in its stock as it suspended its 2025 forecast and its CEO, Andrew Witty, stepped down.
Palantir shares jumped about 9% after the White House announced a $142 billion defense deal with Saudi Arabia. CEO Alex Karp’s participation in the Saudi Arabia Investment Forum signaled potential new markets for Palantir’s AI software. Coinbase saw a significant surge of more than 18% as it became the first and only crypto exchange included in the S&P 500, marking a dramatic turnaround for the crypto industry.
President Trump urged the Federal Reserve to cut rates following the cool inflation reading. Wall Street strategists are becoming more bullish on the S&P 500’s outlook for the year, with firms like Goldman Sachs and Yardeni Research raising their year-end targets due to easing tariff tensions and updated economic growth forecasts. Boeing reached a 52-week high on Tuesday, benefiting from the US-China tariff breakthrough and receiving a substantial order for 30 Boeing 737 Max jets from Saudi Arabia’s AviLease.
The Federal Reserve is expected to maintain a ‘wait and see’ approach regarding future rate cuts amid ongoing tariff-related uncertainties. Despite this, the S&P 500 has managed to erase its year-to-date losses, driven by easing global trade tensions and significant recoveries in key sectors.
