U.S. stocks opened with mixed results after inflation dropped to a four-month low in April, although a core measure that excludes food and energy prices showed no change. Consumer prices overall rose by 2.3% year-over-year, slightly down from the 2.4% increase the previous month, according to the Labor Department’s consumer price index, which tracks the average changes in goods and services costs. The core inflation rate, which excludes the more volatile food and energy sectors, remained steady at 2.8%, marking the lowest level in four years.
At 9:47 a.m. ET, the Dow Jones Industrial Average dropped 0.37%, or 156.36 points, landing at 42,253.74. Meanwhile, the S&P 500 increased by 0.26%, or 14.91 points, reaching 5,859.10. The Nasdaq, heavily weighted towards tech stocks, rose by 0.64%, or 119.13 points, to 18,827.47. The benchmark 10-year Treasury yield climbed to 4.467%.
Despite the overall cooling of inflation, eToro’s global market analyst Lale Akoner cautioned against reading too much into the data. “We’re not ready to call it a turning point,” Akoner remarked. “Yes, the headline inflation figure eased, largely due to cheaper oil prices and the biggest drop in grocery prices since 2020, but when we look closer, there are signs of ongoing challenges. Housing costs, for instance, continue to rise stubbornly.”
The inflation outlook remains uncertain, particularly with tariffs still in play. Akoner pointed out that while tariffs have had an impact, it’s still unclear whether they will push consumer prices higher or cause consumers to adjust their purchasing behavior. “In the coming months, we’ll gain more clarity on whether tariffs are pushing up inflation or whether trade tensions will hurt economic growth more than inflation itself,” he explained.
This mixed market response comes after a strong rally on Monday when the U.S. and China announced a 90-day pause on reciprocal tariffs. Starting Wednesday, the U.S. will lower its tariffs on Chinese goods to 30%, down from 145%, while China will reduce its tariffs on U.S. goods to 10%, down from 125%. Following this announcement, the S&P 500 reached its highest point in over two months, and the Dow surged by more than 1,100 points.
Elsewhere, notable market moves included cryptocurrency exchange Coinbase making history by joining the S&P 500. The company will replace Discover Financial, which is being acquired. The change will take effect before the start of trading on May 19. Coinbase’s stock saw a massive jump, climbing more than 15%, making it the first cryptocurrency company to enter the prestigious index.
Meanwhile, Hertz, the car rental giant, reported a wider-than-expected quarterly loss and warned that demand for rentals could be cooling. The news caused Hertz’s stock to plummet by nearly 18%. In contrast, electric air taxi startup Archer Aviation reported stronger-than-expected quarterly results, and its stock rose by about 16%, reflecting growing investor optimism about the future of sustainable aviation technologies.
Rigetti Computing, a company specializing in quantum computing, reported disappointing sales for the first quarter, missing analysts’ expectations. As a result, its stock dropped nearly 11%. On the other hand, aerospace manufacturer Boeing saw a boost in its stock price, which rose by over 2%. The increase came after reports that China had lifted its ban on deliveries of Boeing aircraft, potentially signaling a recovery in international demand for its planes.
As we look ahead, the combination of mixed inflation data, tariff developments, and corporate earnings reports will continue to influence the stock market’s trajectory. Investors will be keeping a close eye on how these factors interact in the coming weeks, especially as inflationary pressures and trade policies remain key drivers of uncertainty in global markets.
