The S&P 500 has fully recovered its 2025 losses, marking a significant turnaround after teetering near a bear market earlier this year. A wave of optimism swept through Wall Street as investors reacted to easing trade tensions between the United States and China and signs of cooling inflation. While the Dow Jones Industrial Average fell by 270 points, or 0.64%, the S&P 500 rose 0.72%, and the Nasdaq Composite surged 1.61%.

Investor sentiment was lifted by a 90-day tariff rollback agreement negotiated between Washington and Beijing, signaling a potential thaw in strained trade relations. This was followed by positive inflation data showing the slowest annual consumer price increase since February 2021, just ahead of the implementation of President Trump’s tariff adjustments.

Financial markets have rallied sharply since Trump began easing his trade rhetoric, opening the door to select tariff exemptions and hinting at broader trade deals. This shift helped unwind earlier fears of a tariff-induced recession, which had pressured stocks at the start of April. Now, with inflation easing and trade friction abating, investors see fewer headwinds to economic growth.

Nvidia led the tech rally with a 5.63% jump after announcing a new artificial intelligence partnership with Saudi Arabia. Meanwhile, the Dow was weighed down by UnitedHealth Group, which plummeted nearly 18% following the suspension of its earnings forecast and the resignation of its CEO, Andrew Witty.

Although the Dow and Nasdaq are still slightly negative for the year, the S&P 500’s recovery signals renewed confidence among investors. Market analysts point to the combined effect of trade stabilization, favorable inflation trends, and a strong technology sector as driving forces behind the turnaround.