Stocks rose on Tuesday following an encouraging report that showed inflation unexpectedly slowed across the country last month.
- The S&P 500 rose 42.36 points, or 0.7%, to 5,886.55 and erased its loss for the year so far.
- The Dow Jones Industrial Average fell 269.67 points, or 0.6%, to 42,140.43.
- The Nasdaq composite rose 301.74 points, or 1.6%, to 19,010.08.
The report on inflation could give the Federal Reserve more leeway to cut interest rates later this year to help the economy, but analysts and economists cautioned that inflation could still run higher in coming months because of President Trump's tariffs, the
AP reports. The S&P 500, which fell nearly 20% below its record last month, is back within 3.9% of its all-time high set in February.
On Wall Street, Coinbase Global jumped 24% after the cryptocurrency exchange learned its stock will join the widely followed S&P 500 index next week. That means many investment funds will likewise add it before trading begins on Monday. Coinbase will replace Discover Financial Services, which is getting bought by Capital One Financial. Stocks in the artificial-intelligence industry were also strong. Nvidia rose 5.6% and was the biggest single force pushing upward on the S&P 500. It's partnering with Saudi Arabia's sovereign wealth fund-owned AI startup Humain to ship 18,000 chips to the Middle Eastern nation to help power a new data center project.
Super Micro Computer, which builds servers used in AI, jumped 16%, and GE Vernova, which is hoping to power vast AI data centers, rose 4%. Palantir Technologies gained 8.1%. They helped offset UnitedHealth Group, whose shares tumbled 17.8% after it suspended its full-year financial forecast due to higher-than-expected medical costs. The nation's largest health insurer also announced that CEO Andrew Witty was stepping down for personal reasons and that Chairman Stephen Hemsley will become CEO, effective immediately. UnitedHealth was the main reason the Dow lagged behind other US stock indexes.
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Tuesday's report said that even with all the uncertainty around trade, and even with many businesses rushing to import products from other countries before tariffs raise their prices, inflation slowed to 2.3% last month from 2.4% in March. It's encouraging because such data pulls the economy further from a worst-case scenario called "stagflation," one where the economy stagnates but inflation remains high. The Federal Reserve has no good way to fix that toxic combination.
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