The S&P 500 and Nasdaq closed higher for a second day as softer U.S. inflation data and a temporary U.S.-China tariff truce boosted investor confidence.
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00:00Alright, now let's take a look at the US market. The S&P 500 and the Nasdaq closed higher on Tuesday for a second straight day after softer than expected inflation numbers added to investor optimism from Monday when the US and China announced a trade shoot.
00:17The Dow fell, however, weighted down by a steep slide in United's health shares after the insurance bellwether suspended its annual forecast and its CEO stepped down.
00:28On the data front, US consumer prices rebounded moderately in April with headline inflation increasing 0.2% last month after dipping 0.1% in March.
00:43Economists, poll by Reuters, had forecast that the CPI would rise 0.3%. The CPI climbed 2.3% in the 12 months through April after advancing 2.4% in the 12-month period until March.
00:56Monday's relief rally followed Washington and Beijing's agreement to dial back stringent reciprocal tariffs, signalling a joint effort to start off a global economic downturn.
01:08The US will temporarily lower the extra tariffs it imposed on Chinese imports to 30% from 145% for three months, while Chinese duties on US imports will fall to 10% from 125% in the same period.
01:23After the tariff shoots, multiple brokerages lowered their odds of a US recession.
01:29The concern in the moment is that interest rates probably just aren't likely to move, at least not anytime soon.
01:37The likelihood of a rate cut next month in June is still less than 50-50.
01:43It gets better progressively in July and forward because we did get at least some favorable news in the CPI report this morning that price pressure is coming down, at least on a headline basis.
01:54The core number remained unchanged, but on a headline basis, it was a best read in four years at 2.3% year over year.
02:02So that's good, but we need more progress on that core number before we're going to believe that we have a way to lower rates in the near future.
02:10So what does that mean? High rates, way on corporate earnings.
02:14That means the cost of capital stays high if you're having to borrow money in order to grow your company, just like people taking out a mortgage.
02:21The more you have to dedicate to interest, the less home you can afford.
02:25That's what's happening right now in the economy is that we're finding companies that have cleaner balance sheets, more cash on hand, less debt.
02:32They're doing better in terms of growing their earnings than their counterparts that have too much leverage.
02:37The S&P 500 gained 42.36 points or 0.72% to end at 5,886.55 points, while the Nasdaq Composite gained 301.74 points or 1.61% to 19,010.08 points.
02:58The Dow Jones Industrial Average fell to 169.67 points or 0.64% to 42,140.43 points.
03:10Among the S&P 500's 11 major industry sectors, technology was the biggest gainer during the session, while healthcare was the biggest loser.