Wall Street Rallies as Inflation Slows More Than Expected/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks rose Tuesday after new data showed a better-than-expected cooling in inflation for April, offering relief amid ongoing trade tensions. The S&P 500 and Nasdaq both climbed, driven by AI stocks and positive investor sentiment. Markets responded favorably despite continued uncertainty around tariffs and Fed rate decisions.
Inflation Eases, Wall Street Reacts Quick Looks:
- S&P 500 rises 0.8%, Nasdaq jumps 1.3%
- April inflation dips to 2.3%, below March’s 2.4%
- Eases fears of stagflation amid trade tension
- Dow slips slightly as markets absorb mixed signals
- AI stocks, Coinbase drive tech rally
- Fed expected to hold rates steady pending more data
- Coinbase to join S&P 500, replacing Discover
- UnitedHealth drops 13% after forecast suspension
- Bond yields mostly steady after inflation report
- Overseas markets mixed; Tokyo gains, Shanghai declines
Deep Look: Wall Street Rallies as April Inflation Slows Unexpectedly
NEW YORK — U.S. markets posted solid gains Tuesday after a closely watched inflation report showed prices rose more slowly than expected in April, lifting hopes that the economy may dodge a feared “stagflation” scenario. The S&P 500 climbed 0.8%, with the Nasdaq jumping 1.3% as tech stocks — particularly those in the AI sector — powered ahead.
The inflation report came as a welcome surprise for investors navigating economic crosscurrents, including rising tariffs and slowing global demand. The latest data from the Bureau of Labor Statistics revealed that inflation cooled to 2.3% in April, down from 2.4% in March. Despite ongoing concerns over the U.S.-China trade conflict, the data signaled a potentially less aggressive environment for Federal Reserve policy in the near term.
“This is an encouraging sign for both consumers and investors,” said Alexandra Wilson-Elizondo of Goldman Sachs Asset Management. “It reduces pressure on the Fed to act preemptively and keeps the door open for easing later in the year — assuming conditions hold.”
AI and Tech Stocks Drive Gains
Tech and artificial intelligence stocks led the charge, with Nvidia surging 4.7% and Super Micro Computer up 8.5%. Palantir Technologies also rose 4%, further strengthening the Nasdaq’s position. These gains reflect continued investor enthusiasm for AI infrastructure and applications, sectors largely immune to tariff volatility.
Coinbase Global was another standout performer, soaring 15.5% after it was announced that the cryptocurrency exchange would be added to the S&P 500 index next week. Funds tracking the index will now be required to include Coinbase in their holdings, boosting demand. The company will replace Discover Financial Services, which is being acquired by Capital One.
Dow Trades Mixed Amid Broader Volatility
While tech stocks rallied, the Dow Jones Industrial Average dipped slightly, down 76 points or 0.2%. Health insurance giant UnitedHealth Group dragged down the index, falling 13% after it suspended its full-year financial forecast. The firm also announced that CEO Andrew Witty would step down for personal reasons, with Chairman Stephen Hemsley stepping in immediately.
Under Armour shares edged up 1.3% after posting quarterly revenue that slightly exceeded expectations. While the company’s reported loss was in line with Wall Street’s forecasts, CEO Kevin Plank noted progress in rebranding efforts and projected stronger revenues for the coming quarter.
Fed Likely to Wait on Rate Cuts
Despite the positive inflation reading, analysts say the Federal Reserve is unlikely to rush into any interest rate cuts. The continued threat of tariff-related inflation keeps the central bank cautious. Markets will be looking for consistent signs of cooling prices before anticipating any Fed action.
“Investors know this isn’t over,” said Louis Wong of Phillip Securities in Hong Kong. “The trade deal is still in play, and any headline can swing the market. I’d advise a cautious approach in the near term.”
Treasury Yields Hold Steady
Bond markets remained relatively calm. The yield on the 10-year Treasury edged up slightly to 4.47% from 4.45%, while the 2-year Treasury yield — which more closely reflects Fed expectations — ticked up to 3.99% from 3.98%.
Global Markets Mixed
International markets mirrored the cautious optimism. European indexes posted modest gains, while Asian stocks were mixed. Tokyo’s Nikkei 225 rose 1.4% as automakers rallied behind a weaker yen, whereas Shanghai’s Composite Index slid 1.9% on continued economic concerns.
One of Japan’s top headlines involved Nissan Motor Co., which rose 3% despite reporting a massive 670.9 billion yen ($4.5 billion) annual loss. The automaker announced plans to lay off 20,000 workers as part of its restructuring plan.
