Closing Recap 

U.S. stocks extended their rally, with the S&P 500 and Nasdaq posting solid gains led by technology, as cooler CPI data and ongoing positive trade deal sentiment overshadowed some profit-taking; the dollar weakened, oil and gold gained, and Treasury yields climbed. 

Key Takeaways 

• Rally Continues: Equities posted another day of gains, building on the U.S.-China trade truce optimism from Monday. 
• CPI Data In-Line to Cooler: April CPI showed inflation moderating (core CPI m/m +0.2%), supporting hopes for eventual Fed rate cuts, though still seen later this year. 
• Tech Leads Again: Technology, Communications, and Consumer Discretionary sectors outperformed, driving the Nasdaq higher. 
• Trade Hopes Persist: New positive headlines regarding potential U.S./Saudi Arabia trade talks and ongoing China de-escalation hopes continued to support sentiment. 
• Sentiment Improving: Fear & Greed Index moved to “Greed,” and analyst upgrade/downgrade ratios improved, though individual investor equity allocation remains low. 
• Wall Street Revises Forecasts: Major firms (Goldman, Barclays, JPM) are cutting recession odds, raising S&P 500 targets, and pushing out Fed rate cut expectations following the trade truce. 
• Gold & Oil Gain: Gold prices rebounded modestly, and crude oil prices rallied on the improved trade outlook and specific supply/demand factors. 
• Dollar Slips, Yields Rise: The U.S. dollar pulled back from yesterday’s sharp gains as inflation data cooled, while Treasury yields climbed, ending near session highs. 

Market Overview 

The U.S. stock market continued its upward trajectory today, building on the significant relief rally ignited by the U.S.-China trade truce announced Monday. While there was some profit-taking in overnight futures ahead of the crucial Consumer Price Index (CPI) report, the data, which came in largely in-line to slightly cooler than expected, provided a modest boost. Core CPI’s smallest year-over-year rise since early 2021 particularly caught attention, reinforcing market expectations for eventual Federal Reserve rate cuts, though likely not until later in the year. 

Index	Up/Down	% Change	Last
DJ Industrials	-269.67	-0.0064	42140
S&P 500	42.36	0.0072	5886
Nasdaq	301.74	0.0161	19010
Russell 2000	10.15	0.0049	2102

New positive trade headlines, including potential progress on a U.S./Saudi Arabia deal and ongoing optimism surrounding the China tariff pause, further buoyed sentiment throughout the session. Technology, Communications, and Consumer Discretionary sectors led the gains, while defensive areas like Consumer Staples and Healthcare lagged. Market breadth improved as the day progressed, with advancers outnumbering decliners by a 2:1 margin by the close. Sentiment indicators are showing a notable improvement from the “Extreme Fear” levels seen just a month ago, with the Fear & Greed Index now in “Greed” territory. This shift is also reflected in Wall Street analyst revisions, with prominent firms like Goldman Sachs cutting recession odds and raising their S&P 500 targets. However, small caps continued to underperform their large-cap counterparts.

Economic Data 

Yesterday’s key economic release was the April Consumer Price Index, which showed inflation moderating, potentially giving the Fed more room to maneuver later in the year. 

• Consumer Price Index (CPI) (Apr): Headline CPI rose +0.2% m/m (below +0.3% est., vs. +0.1% prior). 
• Year-over-year, headline CPI was +2.8% (in-line with consensus and prior). 
• Core CPI (ex-food & energy) rose +0.2% m/m (below +0.3% est., vs. -0.1% prior). Year-over-year, core CPI was +2.3% (below +2.4% est. and prior). 
• Real Earnings (Apr): Declined -0.1% m/m (vs. +0.6% prior). 

Commodities, Currencies, and Treasuries 

Gold prices rebounded modestly after yesterday’s sharp sell-off, with June futures settling up $19.80 (+0.61%) at $3,247.80 per ounce. The gains were attributed to the slightly cooler CPI print potentially supporting a Fed cut narrative down the line and lingering underlying safe-haven demand given that the tariff “pause” is not yet a permanent “deal.” Crude oil prices also rallied, with WTI gaining $1.72 (+2.78%) to settle at $63.67/bbl. The benign CPI reading, continued optimism around trade de-escalation (particularly China), and positive headlines regarding U.S./Saudi Arabia talks all contributed to the upward move, alleviating some demand concerns. The U.S. dollar index pulled back sharply (-0.75%) following the cooler CPI data, as expectations for immediate Fed hawkishness eased. The Euro gained significantly against the dollar. Treasury yields climbed throughout the afternoon, erasing early dips, with the 10-year yield finishing up over 4 basis points near 4.50%, perhaps reflecting increased risk appetite or supply concerns.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	1.72	USD/bbl	63.67
Brent	1.01	USD/bbl	65.97
Gold	19.8	USD/oz	3247.8
EUR/USD	0.0098	USD	1.1185
USD/JPY	-0.95	JPY	147.5
10-Year Note	0.044	%	0.04501

Looking Ahead 

The market will continue to digest the implications of the cooler CPI report and assess whether the recent trade optimism can be sustained. While no major U.S. economic releases are scheduled for tomorrow, trade headlines remain a potential catalyst. Investors will also monitor ongoing Q1 earnings reports for further insights into corporate performance and guidance. The shift in analyst expectations regarding recession odds and Fed policy will also be a theme to watch.