The S&P 500 has completely erased its losses for the year, marking a significant milestone in its recovery from near-bear market territory. After a turbulent start to the year, the index’s strong performance reflects renewed investor confidence, driven by easing macroeconomic pressures and improving trade relations. This rebound highlights the resilience of the broader market in the face of earlier fears surrounding inflation and trade policy.
Mixed Market Performance as Inflation Eases and U.S.-China Tariff Truce Boosts Sentiment
On Tuesday, U.S. stock indexes showed mixed results as investors processed encouraging inflation data and signs of easing trade tensions between the U.S. and China. The Dow Jones Industrial Average dropped by 270 points (0.64%), while the S&P 500 gained 0.72%, and the Nasdaq Composite rose 1.61%. Despite the gains, the Dow and Nasdaq are still down year-to-date by 0.95% and 1.56%, respectively.
S&P 500 Wipes Out 2025 Losses as Inflation Cools and U.S.-China Tariff Truce Lifts Market SentimentMarkets received a major lift after Washington and Beijing agreed to lower tariffs for a 90-day period. This truce, along with U.S. inflation data showing the lowest annual increase in consumer prices since February 2021, further boosted investor sentiment. These developments come as a welcome change following months of market stress over inflation and trade policy under the Trump administration.
Trade Progress, Eased Inflation, and Company News Shape Diverging Market Index Performances
President Trump’s softened stance on tariffs and prospects of new trade agreements have helped reverse investor fears from earlier this year. April began with market declines due to recession concerns, but the narrative shifted with tariff carve-outs and a breakthrough in U.S.-China trade talks. Chris Zaccarelli of Northlight Asset Management noted that with better-than-expected inflation numbers, a major market concern has now been alleviated.
While most indexes rose, the Dow was pulled down by a sharp 17.8% drop in UnitedHealth Group shares. The decline followed the company’s decision to suspend earnings guidance and the announced resignation of CEO Andrew Witty. As a price-weighted index, the Dow was particularly affected due to UnitedHealth’s significant influence, in contrast to the broader market’s upward trajectory.
