This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
At its May 7 meeting, the U.S. Federal Reserve warned that President Donald Trump’s heavy tariffs from April 2 have put America at greater risk of stagflation, in which the economy slows or contracts while inflation soars.
However, Tuesday’s inflation data revealed that prices haven’t increased yet; the annual reading was lower than anticipated, and the core figure, which does not include volatile food and energy prices, was also lower than anticipated for the month.
It’s worth noting that the data reflects just one month following the implementation of Trump-era tariffs. The surge in imports earlier in the year, a key factor behind the U.S. GDP contraction in the first quarter, may have softened price pressures. Additionally, businesses might have absorbed some of the tariff costs themselves.
However, inflationary pressures are likely to ease with the suspension of “reciprocal” tariffs, a trade agreement reached with the U.K., and a temporary reduction in steep tariffs on Chinese goods. These developments should help sustain consumer spending, which remains the backbone of the U.S. economy, and for now, reduce fears of stagflation.
What To Note Today
U.S. Inflation Hits Lowest Level Since Early 2021
April’s consumer price index rose just 0.2%, putting annual inflation at 2.3%, the lowest since February 2021, and below the projected 2.4%. Core inflation also climbed 0.2% for the month, which aligns with expectations.
S&P 500 Turns Positive in 2025 Amid Tech Surge
The S&P 500 gained 0.72% on Tuesday, edging into positive territory for the year. Nvidia led the rally, jumping 5.6% on news of a major chip deal with Saudi Arabia. However, the Dow slipped 0.64% after a steep drop in UnitedHealth shares.
Trump Ends Sanctions on Syria During Saudi Visit
During his visit to Saudi Arabia, President Trump announced the full removal of U.S. sanctions on Syria. The announcement came alongside news of a $600 billion Saudi investment commitment in the U.S. economy.
Microsoft Cuts 3% of Workforce Despite Strong Earnings
Microsoft is laying off about 6,000 employees, or 3% of its workforce, as part of restructuring efforts to flatten management. This comes shortly after posting $25.8 billion in quarterly profit and issuing a positive outlook.
Coinbase Shares Soar After S&P 500 Inclusion News
Coinbase stock jumped 24% after S&P Global revealed the crypto firm will join the S&P 500 on May 19, replacing Discover Financial. The move sparked investor enthusiasm, marking its biggest rally since November 2024.
UBS Wealth Downgrades U.S. Equities Despite Market Momentum
While optimism grows around trade progress and S&P 500 gains, UBS Wealth took a contrarian stance, downgrading U.S. stocks in its latest advisory, even as other firms raise their outlook for 2025.
GM Aims to Lead With New Cost-Saving EV Battery Tech
General Motors plans to introduce lithium manganese-rich batteries by 2028, aiming to slash costs for its largest EVs like the Silverado and Escalade IQ. The new tech relies on more abundant, cheaper minerals than current battery models.
