The S&P 500 surged 0.7% on Tuesday, driven by easing inflation fears and the recent U.S.-China tariff agreement, improving risk sentiment among investors. In contrast, the Dow Jones Industrial Average fell by 0.6%, hindered by a decline in UnitedHealth shares, while the Nasdaq Composite rose 1.6%, largely propelled by the technology sector.

Inflation Trends: Recent Index Performance

• Headline CPI: Recorded a 2.3% increase year-on-year in April, compared to the 2.4% prediction; it is the slowest pace since February 2021.

• Monthly Change: Increased by 0.2%, below the forecast of 0.3%.

• Core CPI: Rose 2.8% year-on-year and 0.2% month-on-month, undercutting the consensus of 0.3%.

Over half of April’s CPI increase came from shelter costs, with additional contributions from energy, medical, and household goods. Analysts from Morgan Stanley stated that “there are no indications that tariffs are currently pushing prices upward.”

Boosted Sentiment from Trade Agreement

A week after the announcement of a 90-day tariff pause—with U.S. tariffs on Chinese imports reduced from 145% to 30%, and China’s duties on U.S. goods lowered from 125% to 10%—investors are witnessing renewed confidence in the markets. Following these developments, Goldman Sachs adjusted its U.S. recession probability to 35%.

Notable Corporate Movements

• Boeing (NYSE:BA): Surged by 2.3% after news that China lifted its delivery ban on the company’s jets.

• NVIDIA (NASDAQ:NVDA): Jumped 6% amid reports of an 18,000-GPU sale to Saudi firm HUMAIN for a 500 MW data center.

• UnitedHealth (NYSE:UNH): Fell 18% following a full-year guidance suspension and CEO transition announcements.

• Under Armour (NYSE:UAA): Increased 3% after first-quarter revenue exceeded projections, despite reporting a net loss.

• Coinbase (NASDAQ:COIN): Climbed 4% ahead of its soon-to-be inclusion in the S&P 500 on May 19.

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Future Outlook

• Federal Reserve Commentary: Monitor insights from Fed officials later this week for clues pertaining to rate policy shifts.

• Earnings Outcomes: Q1 results from sectors sensitive to trade costs and consumer spending will further assess the market’s resilience.

• Upcoming Data Releases: Watch for Producer Price Index and Retail Sales data, which will clarify if the cooling CPI trend is sustainable.

Investors should navigate this evolving situation carefully, balancing relief over trade tensions with awareness of forthcoming economic indicators.