Wall Street made a strong comeback Tuesday, with the S&P 500 clawing back into the green for 2025, buoyed by optimism over easing US-China trade tensions, a lighter-than-expected inflation print, and a powerful rally in artificial intelligence stocks.
While the Dow Jones Industrial Average lagged due to a steep decline in UnitedHealth shares, the broader market sentiment remained bullish, as investors found renewed confidence in the economic outlook and equity valuations.
AI stocks power market rebound
The S&P 500 rose 0.8% on the day, while the Nasdaq Composite jumped 1.6%, driven by gains in technology and semiconductor stocks.
Nvidia led the charge, surging 6% after announcing it would deliver more than 18,000 advanced AI chips to Saudi Arabian startup Humain.
The move reinforced the company’s position at the heart of the booming AI revolution and lifted peer chipmakers like AMD and Broadcom, which added about 4% each.
The rally in AI-related equities added crucial momentum to a market that has been weighed down for much of the year by global macroeconomic uncertainty and geopolitical stress.
Dow slips on UnitedHealth shock
Despite the tech-driven rally, the Dow Jones Industrial Average dropped 214 points, or 0.5%, dragged lower by UnitedHealth Group, whose shares plummeted 16%.
The healthcare giant announced the unexpected resignation of CEO Andrew Witty and pulled its 2025 guidance, citing elevated medical costs.
The announcement spooked investors and raised concerns over healthcare sector margins in the coming quarters.
CPI surprise boosts investor sentiment
Adding fuel to Tuesday’s gains was a better-than-expected April inflation report. The Consumer Price Index (CPI) rose 2.3% year-over-year, slightly below the 2.4% forecast by economists surveyed by Dow Jones.
The modest reading eased fears of a renewed inflation spike and could give the Federal Reserve more breathing room as it considers future interest rate moves.
US-China trade deal sparks optimism—but skepticism remains
Markets also took solace in the temporary thaw in trade tensions between the US and China.
The two countries agreed to a 90-day suspension of tariffs, sending equities sharply higher on Monday and continuing the momentum into Tuesday.
However, ratings agency Fitch cautioned that the agreement should not be mistaken for full-fledged trade normalization.
“In the absence of a lasting deal, uncertainty over where tariff rates will settle and the impact of those already implemented will remain key factors in our macroeconomic forecasts,” the agency noted.
Stock movers to watch
On Holding soared nearly 12% after the sportswear company beat Wall Street expectations on both earnings and revenue.
Coinbase shares jumped 19% after S&P Dow Jones Indices announced the cryptocurrency exchange will be added to the S&P 500 on May 19, replacing Discover Financial Services.
Chevron dipped after HSBC downgraded the stock to “hold” from “buy” and trimmed its price target, citing concerns over the energy giant’s reduced share buyback program.
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