U.S. stocks were mostly higher on Tuesday as investors welcomed signs of cooling inflation and an ongoing thaw in U.S.-China trade tensions. The S&P 500 rose 0.98% by midday, erasing its 2025 losses and climbing further after Monday’s 3.3% surge. The Nasdaq Composite advanced 1.82%, extending its new bull market. However, the Dow Jones Industrial Average slipped 0.31%, dragged down by a dramatic plunge in UnitedHealth shares.
Market Movers:
- UnitedHealth (UNH) -15.6%: Shares crashed after the company abruptly pulled its 2025 guidance and announced CEO Andrew Witty’s immediate resignation for personal reasons. The healthcare giant also flagged surging costs as a major concern. As a heavyweight Dow component, UNH's collapse significantly pressured the blue-chip index, and other health insurers like Humana and CVS also sank in tandem.
- Boeing (BA) +2.9%: Shares jumped to a 52-week high following a series of bullish developments. China lifted its freeze on new aircraft deliveries after the latest round of U.S.-China tariff negotiations, and Saudi-backed AviLease ordered up to 30 737 Max jets. The news boosts Boeing’s outlook after months of uncertainty tied to tariff and regulatory headwinds.
- Nvidia (NVDA) +4.5%: Nvidia surged again, inching closer to a $3 trillion valuation as excitement around AI demand continues to build. The chipmaker began the week with a 5.4% gain and remains a market leader in the sector, supported by bullish sentiment despite broader tech volatility earlier this year.
- Honda (HMC) -1.4%: Shares fell after the automaker warned that President Trump’s new auto tariffs could cost it $3 billion in annual profit. Honda joins a growing list of global firms preparing for financial fallout from the protectionist policies, though investors are hopeful that the 90-day truce buys time for more favorable negotiations.
Inflation Cools, But the Fed Waits
Tuesday’s CPI report showed the slowest annual rate of inflation since 2021, reinforcing the idea that April’s flurry of tariffs has yet to feed through to consumer prices. While investors welcomed the cooling print, Fed officials are likely to remain cautious. Morgan Stanley’s Ellen Zentner noted the full impact of tariffs may not yet be visible, and traders are now pricing in a rate cut in September instead of the previously anticipated June move.
Tariff Truce Lifts Sentiment
The market’s rally has been fueled by news of a 90-day U.S.-China tariff truce, which temporarily reduces duties and removes some immediate growth concerns. Goldman Sachs and Yardeni Research each raised their S&P 500 year-end targets, citing the trade pause and improved economic forecasts. After a steep April selloff tied to tariff fears, the recent developments have helped stabilize sentiment and reawaken bullish bets on equities.
Healthcare Drag Clouds Dow's Outlook
While tech and industrials surged, the healthcare sector was a significant drag, especially on the Dow. UnitedHealth’s steep decline rippled across insurers, raising fresh concerns about cost structures and management stability in the space. With the sector under pressure, the Dow failed to participate in the broader market’s rebound, highlighting its vulnerability to outsized moves in individual components.
Looking Ahead
Investors will now turn their focus to upcoming retail sales and earnings reports for further clues on consumer resilience and corporate margins amid trade uncertainty. While inflation appears contained for now, the impact of tariffs remains a looming wild card for both policymakers and markets. Still, with major indices back in the green for the year and bullish forecasts gaining momentum, sentiment may continue to improve, assuming geopolitical stability holds.