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A trader works on the floor of the New York Stock Exchange on Aug. 4, 2022.
Source: NYSE
Stock futures fell in early Tuesday following a big rally, as investors look ahead to a key inflation report.
Futures on the Dow Jones Industrial Average dipped 247 points, or 0.5%, weighed by a 10% decline in UnitedHealth after the company suspended its 2025 outlook. S&P 500 futures and Nasdaq-100 futures fell 0.2% each.
The consumer price index, a broad measure of goods and services costs across the U.S. economy, is expected to remain at a 2.4% rate in April on a year-over-year basis, according to the Dow Jones consensus. Excluding food and energy, so-called core inflation is expected to run at a 2.8% annual rate, also unchanged from the prior month.
"We will be digging into the data to see if [March's] slower pace continued or if reports of higher costs for some businesses, which have been reported in recent survey data, have translated to higher prices for consumers," said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management.
Wall Street enjoyed a huge rally Monday after the U.S. and China agreed to slash steep tariffs for 90 days, raising hopes a trade war won't tip the economy into a recession.
The blue-chip Dow surged more than 1,100 points, while the S&P 500 popped over 3%, cutting its year-to-date losses to just 0.6%. The Nasdaq Composite added 4.4%. All three averages posted their best day since April 9.
After negotiations in Switzerland over the weekend, the U.S. and China reached a deal to cut "reciprocal" tariffs between both countries down to 10%. The U.S.′ 20% duties on Chinese imports relating to fentanyl will remain in place, meaning total tariffs on China stand at 30%.
Treasury Secretary Scott Bessent told CNBC's "Squawk Box" on Monday that he expects to meet once again with representatives from Beijing in the "next few weeks" to start ironing out a bigger agreement.
See the stocks moving before the bell
These are some of the stocks moving in Tuesday's premarket:
- UnitedHealth — Shares tumbled 7% after the health insurer said it was suspending its 2025 outlook due to higher-than-expected medical expenditures. Additionally, UnitedHealth announced CEO Andrew Witty was stepping down, effective immediately, for personal reasons.
- Rigetti Computing — The quantum firm plunged more than 11% after recording $1.5 million for first-quarter revenue, below the $2.6 million consensus forecast from analysts surveyed by FactSet. However, Rigetti earned 13 cents in earnings per share, while analysts penciled in a loss of 5 cents per share.
- Coinbase — Shares surged 9.2% following the announcement that the crypto trading platform will join the S&P 500, taking effect before trading on May 19. Coinbase will replace Discover Financial Services.
— Alex Harring
Inflation data want show tariff impact until at June or July, Siegel says
The U.S. is likely to see a rise in inflation from even the reduced tariffs, but it likely won't show up in Tuesday morning's data, according to Wharton professor emeritus Jeremy Siegel.
"I don't think we're going to be seeing the effects of this tariff until maybe June or July, because so little actually did come into this country and then get priced at the retail level and then sampled by the government officials to get in," Siegel said on "Squawk Box."
Siegel, who also serves as senior economist at Wisdom Tree, did say he believes the inflation impacts of tariffs will be short-lived and that the Federal Reserve should not overreact.
"Long-term inflation rate indicators are not going up, and the Fed should not be reacting against a supply shock," Siegel said.
— Jesse Pound
Investors should remain flexible as markets likely to remain range bound, says Wells Fargo
Wall Street still has ample headwinds to contend with even as President Donald Trump temporarily slashed stiff tariffs on China, according to Wells Fargo.
"Despite the sharp rebound in more risk assets, markets are by no means out of the woods, and we expect more volatility along with some resistance as investors continue to evaluate the tariff situation and its impact on the global economy and corporate earnings," Wells Fargo Investment Institute global equity strategist Chris Haverland wrote in a Monday note.
"We recommend a nimble approach to rebalancing for all major asset classes, as we anticipate range- bound markets toward year end," he added.
— Brian Evans
UnitedHealth falls after suspending 2025, CEO stepping down
Shares of UnitedHealth dropped 7% in the premarket Tuesday after the company announce it is suspending its 2025 outlook due to higher-than-expected medical expenditures.
Additionally, UnitedHealth announced CEO Andrew Witty was stepping down, effective immediately, for personal reasons. Stephen Hemsley replaces Witty as chief executive.
UNH falls
— Fred Imbert
Asia-Pacific markets trade mixed after Wall Street's massive rally on U.S.-China trade deal
Asia-Pacific markets traded mixed Tuesday, following Wall Street's massive rally on the back of a trade deal between the U.S. and China, which includes a 90-day pause on tariffs and a drop in reciprocal tariffs by 115 percentage points.
Hong Kong stocks fell sharply, with the Hang Seng Index declining 1.87% — its sharpest drop in nearly a month — to close at 23,108.27, while the Hang Seng Tech Index plunged 3.26% to 5,269.66. This was a reversal from the strong gains both indexes logged in the previous session. Meanwhile, mainland China's CSI 300 index ended the day 0.15% higher at 3,896.26.
Indian markets fell with the benchmark Nifty 50 down 1.27% while the BSE Sensex lost 1.49% as of 1.42 p.m. local time. This is a reversal from the significant gains in the previous session, when Indian markets posted their best one-day gain since February 2021, following optimism over the India—Pakistan ceasefire.
Over in Japan, the Nikkei 225 pared gains to 1.43% to end the day at 38,183.26. This marks the benchmark's fourth consecutive positive session. Meanwhile, the broader Topix index advanced 1.10% to 2,772.14, making this its 13th straight day of gains.
South Korea's Kospi closed flat at 2,608.42 while the small-cap Kosdaq added 0.89% to 731.88.
In Australia, the benchmark S&P/ASX 200 rose 0.43% to end the day at 8,269.
— Amala Balakrishner
SoftBank Vision Funds swing to annual loss
Softbank's Vision Fund business on Tuesday posted a loss in the fiscal year ended March as it booked slowing gains at its massive tech investment arm.
SoftBank said it notched a gain on investment at its Vision Funds of 434.9 billion yen in the fiscal year, a 40% fall from the 724.3 billion yen booked in the previous year.
The Vision Fund segment overall logged a pretax loss of 115.02 billion yen ($777.7 mllion) versus a profit of 128.2 billion yen in the previous fiscal year.
Goldman cuts recession risk to 35% from 45% after Chinese tariff pause
Economists Goldman Sachs cut their estimated risk of a recession in the U.S. to 35% from 45% after President Donald Trump's temporary pause on Chinese tariffs.
"In light of the somewhat smaller hit to GDP growth, the reduced risk of US-China tariffs high enough to cause production disruptions, and the encouraging signal about future tariff policy decisions, we are lowering our 12-month recession probability to 35% (vs. 45% previously)," the firm wrote in a note to clients.
Goldman said the Trump administration is likely to announce other preliminary trade deals over the next few weeks, which might lower the US effective tariff rate slightly further.
— Yun Li, Michael Bloom
Stocks making moves after the bell
Check out the companies making headlines after the bell:
- Archer Aviation — The electric air taxi company's shares climbed nearly 5% in after-hours trading after a better-than-feared quarterly report. Archer Aviation posted a net loss of $93.4 million, narrower than a FactSet consensus estimate of a $116.9 million loss.
- Rigetti Computing — The quantum computing firm saw shares tumbling more than 13% in extended trading after the company's first-quarter sales fell short of estimates. Rigetti's revenue of about $1.5 million came way below a FactSet consensus estimate of $2.6 million.
- Coinbase — The crypto exchange surged 8% in after-hours trading. Coinbase will join the S&P 500, replacing Discover Financial Services. The change will take effect before the start of trading on May 19. Discover is in the process of being acquired by Capital One Financial.
— Yun Li
English (US) ·