Market optimism grows amid US-China trade progress and lower inflation

[UNITED STATES] U.S. stocks largely advanced on Tuesday, buoyed by a continuing rally in oil prices and renewed investor confidence following a thaw in U.S.-China trade tensions. The S&P 500 and Nasdaq closed with solid gains, lifted by reassuring inflation data, while the Dow Jones Industrial Average dipped, weighed down by a drop in UnitedHealth Group shares.

Markets extended Monday’s upbeat momentum after Washington and Beijing agreed to reduce tariffs for 90 days, a move seen as a constructive step toward resolving longstanding trade disputes. The de-escalation has bolstered hopes for a more stable economic outlook, with investors closely watching developments between the world’s two largest economies.

The tech-heavy Nasdaq outpaced other major indices, climbing 1.6%, as investor sentiment rallied. Oil prices also rose more than 2%, underpinned by expectations of stronger demand amid a more favorable global trade environment.

The rebound in crude reflects growing confidence in economic recovery prospects. Easing trade friction, coupled with ongoing efforts by OPEC and its allies to manage supply through production cuts, has created a supportive backdrop for energy markets.

“It seems as if the euphoria that was ignited yesterday or over the weekend has continued into today at least for the S&P 500 and the Nasdaq,” noted Sam Stovall, chief investment strategist at CFRA Research.

On the economic front, the latest consumer price index showed inflation easing to 2.3% in April from a year earlier, slightly below March’s 2.4%. The milder reading has been well received by investors, suggesting that the Federal Reserve could maintain a more accommodative stance without fear of runaway inflation.

While some market observers warned that it’s still premature to fully assess the long-term impact of President Donald Trump’s shifting tariff policies—some of which remain paused or rescinded—the softer inflation numbers have nonetheless fueled speculation of a possible interest rate cut by the Fed.

That prospect has put downward pressure on the dollar, as traders increasingly wager that the central bank could soon move to lower borrowing costs. Though rate cuts can spur economic activity, they also carry implications for the greenback’s value, potentially boosting export competitiveness while raising the cost of imports.

In Europe, stock markets saw modest moves. London ended the session flat, while both Paris and Frankfurt edged up by 0.3%.