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Wall Street is mixed after US inflation data

The dollar dropped and the major U.S. indexes were mixed Tuesday, after data showed that U.S. consumer prices rose less than expected in March. This was when President Donald Trump announced a series of tariffs which have caused havoc to global markets.

On Monday, the U.S. announced that it would suspend its trade war with China for 90 days. It will also reduce reciprocal duties as well as other measures. They will continue to negotiate a permanent agreement.

Tuesday's inflation numbers helped fuel this move. The agreement has reignited investors appetite for stocks and commodities, and cryptocurrencies.

The MSCI index of global stocks rose by 0.61%.

The Bureau of Labor Statistics reported that its Consumer Price Index (CPI), which measures consumer prices, rose by 0.2% in April. This brings the annual rise down to 2.3% and away from 2.4%.

Economists surveyed by predicted a rise of 0.3% per month and 2.4% annually.

Bill Adams, Chief Economicist at Comerica Bank, Dallas, stated in a letter that the report was "good". In 2025, inflation should be manageable by most consumers and business.

Wall Street saw the Dow Jones Industrial Average fall 0.31%, down to 42,276.83. The S&P 500 climbed 0.71% to 5,885.47, and the Nasdaq Composite rose 1.38% to 18,966.06.

The dollar continued to lose ground against a basket currency and was down by 0.29% at the last minute, while the euro rose up to 0.4% in a single day reaching a high of $1.113.

Peter Cardillo is the chief market economist of Spartan Capital, a New York-based firm.

The European stock market was virtually unchanged, with the pan European STOXX 600 index rising 0.05% and Europe's FTSEurofirst 300 broad index increasing 0.03%.

Emerging Market Stocks fell by 0.61% to 1,154.75.

The broadest MSCI index of Asia-Pacific stocks outside Japan fell by 0.51% to 603.95 while Japan's Nikkei gained 1.43% to 38,183.26.

After the Geneva talks, the U.S. announced it will reduce tariffs on Chinese imports from 145% to 30%, and China announced it would lower duties on U.S. imported goods from 125% to 10%.

Traders have reduced their expectations of Federal Reserve rate reductions due to the shift in U.S. China trade relations. They believe that policymakers will be more able to lower rates as inflation risks decrease.

The traders are now pricing in 56 basis point cuts for this year. This is down from April's forecasts of over 100 basis points, when the fears of Trump's Tariffs were at their highest.

Cardillo stated that "the Fed is on the right track and until there are any real changes in terms of ending the trade war by June, a rate cut in June remains in doubt."

Economists and fund managers have stated that the 90-day break is welcomed, but it hasn't changed the larger picture.

Christopher Hodge said that the tariffs would still be higher after all was said and done and this will have a negative impact on U.S. economic growth.

The ratings agency Fitch estimates that the U.S. tariff rate has dropped to 13.1% from 22.8% before the agreement, but is still above the 2.3% at the end 2024.

The benchmark 10-year U.S. Treasury yield increased 2.2 basis point to 4.479%. Meanwhile, the 2-year note yield fell 0.8 basis point to 3.994%.

Spot gold rose by 0.31%, to $3243.73 per ounce, and U.S. Gold Futures gained 0.29%, to $3229.40.

Brent crude futures increased to $65.93 a barrel, an increase of 1.49% for the day. U.S. crude rose 1.74% to $63.00.

(source: Reuters)