Traders work on the floor of the New York Stock Exchange at the opening bell on May 12, 2025.
Angela Weiss | Afp | Getty Images
The S&P 500 rose Tuesday, clawing back into positive territory for the year, as investors extended the sharp gains seen in the previous session due to easing U.S.-China trade tensions.
The broad market index gained 1%, while the Nasdaq Composite climbed 1.8%. The Dow Jones Industrial Average lagged, losing 93 points, or 0.2%, as a 16% drop in UnitedHealth pressured the benchmark.
Shares of Nvidia advanced 6% on news that the company would send 18,000 of its top artificial intelligence chips to Saudi Arabia. Peer chip stocks rose alongside the AI darling, with Broadcom and AMD adding roughly 4% each.
Tuesday’s gain put the S&P 500 up 0.2% for 2025. At one point, the index was down more than 17% for the year, as trade tensions dented investor confidence in equities.
SPX in 2025
However, Wall Street got a reprieve this week after the U.S. and China agreed to a 90-day tariff pause earlier this week. The news sent stocks surging on Monday, with the Dow soaring more than 1,000 points.
“Couple [the trade news] with a massive chips deal in Saudi Arabia, ticks down in inflation which will pull rates cuts closer, and substantive details of [tax cuts] — you get a full risk on market,” said Jamie Cox, managing partner at Harris Financial Group. The White House on Tuesday announced a $600 billion investment in the U.S.
Softer inflation
Adding to Tuesday’s gains was softer-than-expected inflation data released earlier in the day.
The consumer price index, a broad measure of goods and services costs across the U.S. economy, increased 2.3% on an annualized basis in April. Economists polled by Dow Jones expected inflation to remain at a 2.4% rate last month on a year-over-year basis.
“And just like that, the markets’ twin fears – a tariff-induced recession and sticky inflation – have been greatly assuaged,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management. “We’re still concerned that high valuations and market concentration remain risks to much higher stock prices this year, but in the short run, markets should love this data and continue yesterday’s (China-trade) celebration.”
