U.S. inflation data for April came in below market expectations, reinforcing the possibility of interest rate cuts by the Federal Reserve (Fed) this year. This bolstered market sentiment, following gains from eased U.S.-China trade tensions. Despite a strong pre-market rebound, U.S. major indices opened with little movement. The Dow Jones Industrial Average fell over 150 points or nearly 0.4%, while the Nasdaq Composite rose over 110 points or nearly 0.6%. The S&P 500 increased by nearly 0.3% and the Philadelphia Semiconductor Index rose by about 1.4%.
The U.S. Labor Department reported April's Consumer Price Index (CPI) increased by 0.2% month-over-month and 2.3% year-over-year, both below expectations. The Core CPI, excluding food and energy, matched predictions with a 0.2% monthly rise and a 2.8% annual increase. Traders now anticipate possible Fed rate cuts as soon as September. The trade war lull reduced recession risks, with economic improvements reflected in positive corporate earnings forecasts for S&P 500 companies.
NVIDIA (NVDA, Financial) stock rose 2.69% early in trading, following news of relaxed U.S. AI chip export controls to Saudi Arabia and the UAE. This change is expected to enhance AI chip procurement by these nations from U.S. semiconductor firms, supporting Saudi Vision 2030.
