US stocks close mixed after April inflation report. S&P 500 erases losses for the year
U.S. stocks closed mixed after inflation eased in April to a four-month low but a narrower measure that excludes the volatile food and energy sectors remained the same.
The broad S&P 500 index managed to claw back into positive territory for the year after dropping close to a bear market last month on tariff worries. A bear market is hit if the index falls to at least 20% below its recent high.
Overall consumer prices increased 2.3% from a year earlier, down from a 2.4% rise the previous month, according to the Labor Department’s consumer price index, a measure of average changes in goods and services costs. The so-called core rate, less food and energy, was unchanged at 2.8%, though that was the lowest in four years.
The blue-chip Dow index fell 0.64%, or 269.67 points, to 42,140.43, weighed by a 17.79% slump in UnitedHealth Group shares; the S&P 500 rose 0.72%, or 42.36 points, to 5,886.55; and the tech-laden Nasdaq added 1.61%, or 301.74 points, to 19,010.09, led by gains in semiconductor company Nvidia that brought the company back over the $3 trillion market cap mark for the first time since February 28.
The benchmark 10-year Treasury yield rose to 4.475%.
"We’re not ready to call it a turning point," said trading platform's eToro Global Market analyst Lale Akoner. "Yes, the headline number cooled thanks largely to cheaper oil and the biggest grocery price drop since 2020 but the details are less comforting. Housing costs remained stubbornly high," for example.
Additionally, the inflation outlook from tariffs remains murky. In coming months, "we’ll get a clearer picture of whether tariffs feed into consumer prices or trigger substitution effects and whether trade tensions end up hitting growth harder than inflation," Akoner said.
Comerica Chief Economist Bill Adams said "tariff rates have been lowered, so their effect will probably be smaller than seemed possible a week or two ago. Inflation should be manageable for most consumers and businesses in 2025."
On Monday, the U.S. and China announced a 90-day pause on reciprocal tariffs. Effective from Wednesday, the U.S. will temporarily reduce tariffs on China to 30%, down from 145%, and China will reduce tariffs on U.S. goods to 10%, down from 125%. The S&P 500 touched a more than two-month high and the Dow soared more than 1,100 points.
Corporate news
- UnitedHealth Group shares plunged almost 18% after the health insurer suspended its guidance because of rising costs, and chief executive Andrew Witty stepped down.
- Cryptocurrency exchange Coinbase is joining the S&P 500, replacing Discover Financial, which is being acquired. The change will be effective before the start of trading on May 19. It will be the first crypto company to join the broad market index. Shares soared 24%.
- Hertz reported a wider-than-expected quarterly loss and warned of cooling demand. The car rental company's stock slid 17%.
- Nvidia shares added 5.63% after the company's chief executive said the company would sell 18,000 of its top artificial intelligence chips to Saudi Arabian firm Humain. Nvidia is seen as a leader in graphics chips used in AI.
- On Holding's quarterly results topped analysts' forecasts, and its shares advanced nearly 12%.
- Electric air taxi company Archer Aviation reported better-than-expected quarterly results, and its stock jumped almost 23%.
- Rigetti Computing's sales in the first three months of the year fell short of estimates. Its shares dropped 14.59%,
- Plane maker Boeing's shares rose about 2.5% after Bloomberg reported that China lifted its ban on deliveries of Boeing aircrafts.
Cryptocurrency
American Bitcoin, co-founded by President Trump's son Eric and which has its roots in a company backed by the president's other son Donald Jr., is merging with the publicly-traded Gryphon Digital Mining.
The all-stock transaction will allow American Bitcoin to be listed on the Nasdaq exchange. The merger is expected to close as early as the third quarter of this year. Gryphon's shares fell 9.86%.
Bitcoin was last up 1.76% at $104,630.70.
This story was updated with new information.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.