S&P 500 Rises as US Inflation Cools and Tech Stocks Surge

Slowing price growth and easing US-China trade tensions fuel optimism across markets

S&P 500 Climbs While Inflation Eases

The S&P 500 closed higher on Tuesday as fresh data revealed a slowdown in US inflation for April, reinforcing investor confidence in risk assets, particularly in the tech sector. The benchmark index rose by 0.7%, while the tech-heavy NASDAQ gained 1.6%. However, the Dow Jones Industrial Average slipped 0.6%, shedding 269 points.

US Inflation Hits Lowest Rate Since 2021

The latest US Consumer Price Index (CPI) report showed that inflation rose 2.3% year-on-year in April, just under the 2.4% expected. This marks the lowest rate since February 2021, offering reassurance that price pressures may be easing.

Month-on-month, inflation increased by 0.2%, also below forecasts of 0.3%. Core inflation—which excludes food and energy—matched this with a 0.2% monthly rise and a 2.8% annual rate, again under expectations.

The data points to stabilising consumer prices amid ongoing adjustments to global supply chains and recent geopolitical developments.

“There are no signs of tariffs pushing prices yet,” said analysts at Morgan Stanley, referencing the recent US-China trade deal.

US-China Trade Deal Eases Market Concerns

Investors welcomed news of a trade agreement between the US and China, which included substantial tariff reductions. The US will lower its tariffs on Chinese goods from a peak of 145% to 30%, while China will reduce its retaliatory tariffs to 10%.

Both sides have also agreed to a 90-day suspension on new tariffs, easing the long-standing trade tensions and paving the way for smoother international commerce.

This development has prompted Goldman Sachs to revise the risk of a US recession down from 45% to 35%, citing the trade deal as a positive driver of economic stability.

Key Corporate Updates: Boeing, Nvidia, Coinbase

Several major companies made headlines on Tuesday:

Boeing Gains as China Resumes Deliveries

Shares in Boeing rose following a Bloomberg report that China has lifted a delivery ban on its aircraft. Local carriers have now received government approval to resume accepting deliveries from the US aerospace giant.

Nvidia Surges on Saudi AI Chip Deal

Nvidia stock surged over 6% after announcing the sale of 18,000 AI chips to Saudi Arabian firm Humain. The chips will be used in building a 500-megawatt data centre, further solidifying Nvidia’s dominance in the AI hardware market.

Coinbase Set to Join S&P 500

Crypto exchange Coinbase Global also rallied after news it will join the S&P 500 index on 19 May, replacing Discover Financial Services. The move reflects growing institutional acceptance of cryptocurrency-related firms.

UnitedHealth and Under Armour in the Spotlight

Health insurer UnitedHealth saw its shares decline after suspending its full-year forecast due to rising medical costs. Meanwhile, Under Armour stock rose, beating quarterly revenue expectations despite reporting a loss.

Conclusion: Investor Optimism Grows Amid Positive Signals

The combination of slowing US inflation and improving trade relations between the US and China is boosting confidence across financial markets. With tech stocks rallying and key companies like Nvidia and Boeing showing strength, the S&P 500’s climb reflects broader optimism.

For UK investors, these developments offer valuable insights into global economic trends, signalling opportunities in sectors like AI, aerospace, and digital finance. As inflation cools and international tensions ease, markets may continue to benefit from a more stable global outlook.

Sources: (Investing.com)