U.S. stocks advanced on Tuesday, lifted by softer wholesale inflation data and fresh signs of progress toward a possible U.S.-Iran ceasefire.
The Dow Jones Industrial Average added about 300 points, or 0.6%, to trade near 48,500. The S&P 500 rose 1.1%, and the Nasdaq Composite jumped 1.8%, powered by gains in large technology names.
Wholesale inflation eases more than expected
The Bureau of Labor Statistics reported that the Producer Price Index (PPI) for March increased 0.5% from the prior month, well below expectations for a 1.2% rise. On a 12‑month basis, PPI was up 4.0%, under the 4.6% forecast.
Core PPI, which strips out food, energy and trade services, rose 0.2% in March. That marked a slowdown from the 0.5% monthly increases recorded in each of the previous two months, reinforcing the impression that underlying price pressures are moderating.
The report followed last week’s softer Consumer Price Index reading, giving markets a second data point suggesting that inflation is easing across several categories.
Energy prices remain high but show limited spillover
Despite the cooler headline figures, energy remained a pressure point. Final demand energy prices climbed 8.5% in March, while gasoline prices surged 15.7%.
Even so, services prices were flat on the month, indicating that higher energy costs have not yet fed broadly into other areas of inflation. That distinction helped calm concerns that an energy shock might reignite more persistent price pressures.
Fed gets more leeway on future policy moves
The moderation in wholesale prices is being closely watched by the Federal Reserve, which has kept policy tight to counter inflation built up over the past two years.
The weaker‑than‑expected PPI reading gives the central bank additional room to consider a shift in its interest rate path later in 2024, if the trend continues.
Fed Chair Jerome Powell has stressed that officials need several consecutive months of favorable inflation data before committing to a policy pivot. He has warned against reacting to a single report, but a sustained disinflation pattern would strengthen the argument for easing financial conditions.
Rate-cut expectations and bond yields move on data
Following the PPI release, traders adjusted their rate outlook. Federal funds futures now imply about a 72% probability of at least one rate cut by the September meeting, according to CME Group’s FedWatch Tool. That is up from roughly 55% a week earlier, underscoring how quickly sentiment has shifted.
The bond market reacted sharply. The yield on the 10‑year U.S. Treasury note fell 8 basis points to 3.92%, its largest one‑day decline in nearly five weeks. Lower Treasury yields tend to enhance the relative appeal of equities and other assets that do not provide a fixed income stream.
Risk appetite was also visible in volatility gauges. The CBOE Volatility Index, or VIX, slid 9% to trade below 14, signaling expectations for calmer conditions and less demand for near‑term downside protection.
U.S.-Iran talks support risk sentiment
Geopolitical developments added to the upbeat tone. Sentiment improved after reports that Washington and Tehran are preparing for a second round of talks, following initial peace discussions aimed at a ceasefire.
A U.S. official confirmed that preparations for additional negotiations are underway, though no date has been set. Hopes for de‑escalation in the region eased concerns about a prolonged spike in energy prices and broader geopolitical risk.
Tech leads gains on ongoing AI enthusiasm
Technology names were at the forefront of Tuesday’s rally.
Oracle climbed around 5%, extending gains from a conference‑driven surge tied to new artificial intelligence initiatives. Nvidia and Palantir also traded higher, building on recent momentum fueled by strong demand for AI‑related hardware and software.
The continued leadership from large tech and AI‑linked shares helped propel the Nasdaq to its strongest performance among the major indexes.
Bank earnings send mixed signals
Bank results painted a more uneven picture.
JPMorgan Chase beat profit expectations but slipped modestly after the bank trimmed its full‑year net interest income guidance, signaling some caution on future lending margins.
Wells Fargo dropped more than 5% after releasing weaker quarterly numbers, highlighting ongoing pressure in parts of the financial sector even as the broader market pushed higher.
Oil tumbles on ceasefire hopes and demand downgrade
Crude oil prices fell sharply as ceasefire optimism reduced the geopolitical risk premium that had built up since the Iran conflict intensified in late February.
West Texas Intermediate (WTI) futures dropped more than 5% to trade near $93 a barrel. Brent crude slid about 3% to around $95.
The declines were compounded by a fresh outlook from the International Energy Agency, which cut its global oil demand forecast for 2026 and now expects consumption to contract rather than expand.
Lower oil helps cool inflation fears and extend rally
The pullback in crude tempered inflation worries, aligning with the softer PPI and CPI readings to reinforce the view that price pressures may be stabilizing or easing.
That combination supported risk assets and helped extend Monday’s equity gains. Major indexes continued to move further above the levels seen before the Iran conflict escalated in late February, as traders balanced improving inflation data against lingering geopolitical and earnings risks.
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