Wall Street rises again as the S&P 500 erases its loss for 2025
[May 14, 2025] By
STAN CHOE
NEW YORK (AP) — Most U.S. stocks rose Tuesday following an encouraging
report that showed inflation unexpectedly slowed across the country last
month.
The S&P 500 climbed 0.7%, coming off an even bigger gain to start the
week after the United States and China announced a 90-day pause in their
trade war to allow for negotiations. The Dow Jones Industrial Average
fell 269 points, or 0.6%, and the Nasdaq composite jumped 1.6% as AI and
other tech stocks led the way.
Stocks have been roaring back since the S&P 500 fell nearly 20% below
its record last month on hopes that President Donald Trump will ease his
stiff tariffs on trading partners worldwide before they create a
recession and send inflation spiking higher. The S&P 500, which sits at
the center of many 401(k) accounts, is back within 4.2% of its all-time
high set in February and positive again for the year so far.
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. It could try to lower rates to help
the economy, for example, but that would likely worsen inflation in the
short term.
Even with Tuesday’s encouraging report, though, economists and analysts
say inflation may still run higher in coming months because of Trump’s
tariffs. That will likely leave the Fed waiting for more data to guide
their decision on whether and when to cut interest rates in order to
help the economy.
It’s similar to the wait that investors in general are enduring. With
the Fed set to make no moves on interest rates for the time being,
markets will likely trade “with negotiation and reconciliation
headlines,” according to Alexandra Wilson-Elizondo, global co-head and
co-chief investment officer of multi-asset solutions within Goldman
Sachs Asset Management.
“I think investors are aware that the trade deal is not done yet,” said
Louis Wong, director for Phillip Securities Group in Hong Kong.
“I would advise investors to remain cautious in the near term and to be
prepared for unexpected news from the trade front,” he added.
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.
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Options trader Chris Dattollo, right, works on the floor of the New
York Stock Exchange, Monday, May 12, 2025. (AP Photo/Richard Drew)
 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%.
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 U.S.
stock indexes.
All told, the S&P 500 rose 42.36 points to 5,886.55. The Dow Jones
Industrial Average fell 269.67 to 42,140.43, and the Nasdaq
composite climbed 301.74 to 19,010.08.
In the bond market, Treasury yields ticked higher with hopes for the
U.S. economy. The yield on the 10-year Treasury rose to 4.48% from
4.45% late Monday.
The two-year Treasury yield, which moves more closely with
expectations for Fed action, ticked up to 4.01% from 3.98%.
In stock markets abroad, indexes rose across much of Europe and
Asia. Stocks fell 1.9% in Hong Kong but rose 1.4% in Tokyo.
Automakers were among the big gainers in Japan. Nissan Motor Co.
added 3% ahead of an announcement that it plans to lay off 20,000 of
its workers as part of its restructuring efforts. The automaker said
Tuesday that it racked up a loss of 670.9 billion yen ($4.5 billion)
in the last fiscal year.
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AP Business Writers Matt Ott and Elaine Kurtenbach and AP video
journalist Alice Fung contributed.
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