US Stocks Erase Year-to-Date Losses as Trade Optimism and Cooling Inflation Boost Markets
In a major turnaround, the S&P 500 has now officially erased all of its losses for 2025, marking a significant milestone in Wall Street’s recent rally. The benchmark index’s rebound reflects growing investor confidence, fueled by signs of easing inflation and improving trade relations between the United States and China.
On Tuesday, US markets closed mixed. The Dow Jones Industrial Average dropped 270 points, or 0.64%, largely dragged down by a sharp decline in UnitedHealth Group shares. In contrast, the broader S&P 500 rose 0.72%, while the Nasdaq Composite—heavily weighted toward tech stocks—climbed 1.61%.
Despite Tuesday’s mixed performance, the S&P 500’s strong gains over the past few weeks have helped it recover completely from losses earlier this year. The Dow and Nasdaq remain slightly negative year-to-date, down 0.95% and 1.56% respectively, but momentum appears to be building across the board.
Investor sentiment received a major boost Monday after the US and China reached an agreement to reduce tariffs for a 90-day period. The development eased fears of an escalating trade war and opened the door for potential progress on longer-term trade agreements. Stocks extended their rally on Tuesday, bolstered by new data showing inflation is cooling faster than expected.
According to the Bureau of Labor Statistics, consumer prices in April saw their smallest annual increase since February 2021—an encouraging sign for both consumers and investors. The report arrives just ahead of the full economic impact of the Trump administration’s recent tariff adjustments, further fueling hopes that inflation could continue to trend downward.
“Market concerns about slowing growth and a potential recession driven by aggressive tariffs dominated the early weeks of April,” said Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management. “But the recent pause in tariffs, a breakthrough in US-China trade talks, and now a surprisingly favorable inflation report have collectively cleared the way for a renewed market rally.”
One of Tuesday’s big winners was Nvidia, whose stock surged 5.63% following news of a partnership with Saudi Arabia on artificial intelligence initiatives. The move is expected to bolster the chipmaker’s global footprint in the rapidly growing AI sector.
Meanwhile, the Dow was the only major index to close in the red, primarily due to UnitedHealth Group’s disappointing announcement. The healthcare giant suspended its earnings guidance and revealed that CEO Andrew Witty would step down for personal reasons. As one of the Dow’s most heavily weighted components, UnitedHealth’s nearly 18% drop significantly affected the index’s performance.
Despite some pockets of volatility, Wall Street’s broader momentum appears intact. Much of the market’s recent strength has been attributed to easing policy tensions, improving macroeconomic indicators, and the resilience of tech giants and consumer-facing companies.
Looking ahead, investors will be closely watching upcoming economic data and policy updates for further signs of stability—or potential disruption. But for now, the S&P 500’s return to positive territory serves as a powerful reminder of how quickly market sentiment can shift when key pressures begin to ease.
