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A rally in US stocks on Tuesday wiped out the S&P 500’s losses so far this year, as lower than expected inflation figures added fuel to gains sparked by Donald Trump’s deal with China to cut tariffs.
The S&P 500 was up 0.8 per cent in morning trade in New York after data showed US inflation unexpectedly fell to 2.3 per cent in April. The move extended the past month’s rebound and left the Wall Street benchmark 0.1 per cent higher in 2025.
Rising trade tensions had already hurt US stocks before Trump’s sweeping “liberation day” tariff announcements on April 2 sent the S&P tumbling up to 15 per cent, as investors dumped US assets and slashed their forecasts for economic growth.
But traders piled back into stocks on April 9, when the index jumped 9.5 per cent after Trump paused his “reciprocal” tariffs on most countries for 90 days, and they have continued to snap up US equities ever since. The S&P rose 3.3 per cent on Monday after the US and China said they would both cut tariffs for at least the next 90 days following talks in Switzerland over the weekend.
“There’s been an instant reversal in the prevailing trends of the last several months,” said Shep Perkins, an equity fund manager at Putnam Investments. The agreement had been a “big positive surprise and came in the face of quite bearish sentiment for US equity markets”, he added.