Markets opened mixed on Tuesday as investors weighed cooling inflation data and rising optimism around U.S.–China trade relations against recent gains from Monday’s historic rally.
The Dow Jones Industrial Average opened 150 points lower, snapping momentum from Monday’s 1,100-point surge one of its strongest single-day gains in recent memory. Meanwhile, the S&P 500 and Nasdaq edged slightly higher, supported by improving economic data and an upgraded outlook from Wall Street analysts.
CPI Data Signals Inflation Cooling
On Tuesday, the Consumer Price Index (CPI) rose 2.3% year-over-year, marking the lowest annual increase since 2021. The figure eased concerns over persistent inflation and aligned with investor hopes for a more dovish stance from the Federal Reserve later this year.
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, told CNBC the markets’ “twin fears” of a tariff-induced recession and sticky inflation have eased significantly. “Markets should continue yesterday’s celebration,” Zaccarelli added, referring to Monday’s rally driven by optimism around U.S.–China trade negotiations.
Goldman Sachs Raises S&P 500 Forecast
Adding to bullish sentiment, Goldman Sachs raised its 12-month S&P 500 target from 6,200 to 6,500, signaling an 11% upside from current levels. This revision marks a turnaround from the firm’s two previous downgrades in March, which had been driven by fears of a potential U.S. recession and heightened geopolitical risk from tariff tensions.
Boeing and Coinbase Lead Early Gainers
Boeing (BA) shares climbed 2.5% in early trading after reports from Bloomberg suggested China has lifted its ban on aircraft deliveries from the American aerospace giant. The move is expected to unlock billions of dollars in pending orders and marks a significant shift in U.S.–China trade dynamics.
Meanwhile, Coinbase (COIN) stock surged nearly 10% following the announcement that the crypto exchange will be added to the S&P 500 index on May 19. The news is being interpreted as a sign of growing mainstream acceptance of the cryptocurrency sector, further buoying investor confidence in the platform’s future growth.
Market Outlook
Despite the Dow’s minor dip, the broader market is showing signs of resilience. The CPI report reinforces expectations of slower inflationary pressure, which could pave the way for a Federal Reserve rate cut in the second half of 2025. Combined with improving trade relations and a strong earnings season, analysts remain broadly positive about equity performance into Q3.
While Tuesday’s dip in the Dow Jones shows that the market is taking a breather after Monday’s record rally, the overall tone remains upbeat. Easing inflation, upgraded forecasts, and significant corporate developments are painting a bullish picture for investors especially in the tech, aerospace, and crypto sectors.
