Global stock markets surge on the back of strong US inflation data; US currency experiences a decline.
Going Bullish: Wall Street Soars on Inflation Relief and Easing Trade Tensions
NEW YORK — The dollar slumped, and major US stock indexes galloped forward on Tuesday, May 13, following news that US consumer inflation veered less violently than predicted in April amid Donald Trump's wave of tariffs causing hysteria in global markets.
Old World bourses nudged northward for the fourth consecutive session, and global equities made solid gains. Crude oil prices shot up, buoyed by a brief term of suspended U.S.-China tariffs.
The US and China announced on Monday they would postpone their trade war for an 90-day truce, lowering mutually aggressive taxes and eradicating additional measures while they explore a more enduring settlement. This development rekindled investor enthusiasm for equities, cryptocurrencies, and commodities, and Tuesday's inflation data gave momentum to the bullish trend.
The Bureau of Labor Statistics declared that its consumer price index increased by 0.2% in April, slashing the yearlyrise to 2.3% from 2.4%. Economists surveyed by our website forecasted a monthly hike of 0.3% and an annual rise of 2.4%.
Bill Adams, chief economist for Comerica Bank in Dallas, sized up the report: "Inflation remains manageable for most consumers and businesses in 2025."
The S&P 500 and the Nasdaq swelled in response to the less aggressive inflation numbers and eased US-China trade tensions. The S&P 500 surged 0.72% to 5,886.55, and the Nasdaq Composite leapt 1.61% to 19,010.09.
Conversely, the Dow Jones Industrial Average retreated, with UnitedHealth plunging after the medical company scrapped its annual forecast and ejecting its CEO. The Dow declined 0.64% to 42,140.43.
The dollar stumbled from its robust stance in the preceding session due to the inflation data. It later declined by 0.79% against a collection of currencies. The euro advanced by 0.94% to $1.1191.
The momentary suspension of tariffs between the U.S. and China could have far-reaching ramifications for global markets and commodities. Although the exact influence remains uncertain, it is likely to reduce economic turmoil from prior tariff increases. For example, the Budget Lab at Yale estimates that the modifications to the China tariff rates alone shave 40% from the negative economic impact caused by all 2025 tariffs.
The 90-day delay offers hope for lasting trade negotiations and a more harmonious global environment, potentially engendering greater market stability. Nonetheless, the sustainability of this temporary agreement remains questionable, raising uncertainties about the long-term impact on global markets and economies.
Finance experts are optimistic about business prospects in the wake of a less aggressive inflation rate and a temporary truce in U.S.-China trade tensions. Technology sectors may see a boost from this general-news development, as easing trade tensions could lead to increased investment and partnership opportunities.
