Tuesday evening saw U.S. stock futures stabilize following gains in the S&P 500 and Nasdaq Composite. While optimism regarding the U.S.-China trade truce fueled initial rises, a slightly lower-than-expected Consumer Price Index (CPI) report tempered enthusiasm.

Future Reactions: A Pause on Gains

• S&P 500 Futures: +0.1% to 5,908.0

• Nasdaq 100 Futures: Unchanged at 21,290.5

• Dow Jones Futures: +0.1% to 42,265.0

During standard trading, the S&P 500 increased 0.7%, and the Nasdaq leaped 1.6%, propelled by advancements in tech and cyclical sectors. The Dow, however, fell 0.6%, primarily due to a drastic 18% drop in UnitedHealth Group’s (UNH) shares after its CEO transition and guidance suspension.

April CPI: Cooling Indicators with Ongoing Core Pressures

The headline CPI for April rose by 2.3% year-on-year, falling short of the 2.4% expectations and marking the slowest growth since early 2021. Month-on-month, prices increased by 0.2%, with forecasts hitting at 0.3%.

• Core CPI experienced a month-on-month increase of 0.2%, slightly below the consensus of 0.3%.

• Shelter expenses contributed considerably to April’s gains, while energy and household goods had modest price increases.

This data follows the agreement between both nations to reduce tariffs, with U.S. tariffs on China dropping from 145% to 30%, and China’s duties on U.S. imports reducing from 125% to 10% for a 90-day period.

Sector Insights: Identifying the Next Move

With overall indices stabilizing, sectors with recent volatility may determine market direction. Investors can monitor how technology, financials, and consumer discretionary have historically responded to CPI surprises and trade agreements by utilizing tools available at entreprenerdly.com, which provides performance data surrounding key macro events.

What Lies Ahead

1. Details on Trade Talks: Specifics on tariff rollbacks will enhance market conviction.

2. Fed Commentary: Announcements from Federal Reserve officials this week may influence rate expectations based on inflation and trade data.

3. Earnings Reporting: As companies unveil Q1 results, focus on guidance updates related to tariff impacts and input cost pressures.

Investors are positioned between relief from trade uncertainties and caution as they await further policy signals.