U.S. stock markets saw a rebound on Tuesday, with the S&P 500 and Nasdaq rallying as investors reacted positively to cooler inflation figures and renewed optimism over a pause in the U.S.-China tariff conflict. Hopes that the Federal Reserve may move closer to cutting interest rates in the coming months also lifted investor sentiment, especially in the tech-heavy Nasdaq.

The Consumer Price Index (CPI) data released for April showed a milder-than-anticipated rise in prices—up just 0.2% compared to the expected 0.3%—easing fears of runaway inflation. Over a 12-month span, inflation grew 2.3%, slightly below March’s 2.4% reading. Market watchers saw this as a positive sign, especially amid broader concerns about the economic impact of global trade tensions.

However, the Dow Jones Industrial Average bucked the trend, dropping over 150 points. The decline was largely driven by a steep 15.8% fall in UnitedHealth’s stock after the company withdrew its annual forecast and CEO Andrew Witty stepped down unexpectedly. This dragged on the broader index even as other sectors showed resilience.

Market participants largely welcomed the temporary thaw in trade relations between Washington and Beijing. Both countries agreed to scale back aggressive tariffs for 90 days, a move seen as a strategic effort to avoid triggering a global economic downturn. The U.S. will lower its tariffs on Chinese goods to 30%, while China will reduce its duties on American imports to 10% for the same period.

Tech stocks were the biggest winners, led by a 5.6% surge in Nvidia shares. Coinbase also rallied nearly 19% as it gears up to be added to the S&P 500 index on May 19. Overall, the tech sector benefited from the dual tailwinds of easing inflation and improving trade sentiment, both of which suggest a more stable outlook for high-growth firms.

The market breadth was strong, with advancing stocks outpacing decliners on both the NYSE and Nasdaq. The S&P 500 not only recovered losses sustained since early April—dubbed “Liberation Day” following Trump’s initial tariff declaration—but also turned positive for the year. With the earnings season nearly complete and Walmart’s results due next, investors will now shift focus to the Fed’s next move and further trade developments.