U.S. equities showed a divergent pattern at midday Tuesday as investors weighed fresh economic data against new geopolitical signals from President Donald J. Trump. The Nasdaq Composite led gains, jumping 300.60 points, or 1.61%, to 19,008.9, while the S&P 500 rose 46.15 points, or 0.79%, to 5,890.34. In contrast, the DOW Jones Industrial Average lagged, falling 218.86 points, or 0.52%, to 42,191.2. The Russell 2000 was modestly higher, up 1.21 points, or 0.58%, to 209.08.

The Nasdaq’s rise was powered by continued investor appetite for growth stocks amid softening inflation data, while the DOW’s decline reflected weakness in value sectors and multinational exposure to global uncertainties.

Inflation Eases, Markets React

The market’s trajectory continued to be shaped by the April Consumer Price Index (CPI) report released earlier Tuesday. Headline CPI rose 0.2% month-over-month, slightly below the 0.3% forecast, with core inflation holding steady at 0.2%. This moderation provided relief to investors concerned about the Federal Reserve’s rate path.

Year-over-year, headline inflation slowed to 2.3%, its lowest since February 2021, while core CPI remained at 2.8%. The data reinforced expectations for a potential Fed rate cut later this year, with September seen as the likely starting point.

Geopolitical Winds Shift: Trump Signals Syria Sanctions Relief

Markets also digested a flurry of geopolitical developments as President Trump, speaking during a visit to Saudi Arabia, announced that he is considering the cessation of U.S. sanctions on Syria. The move was welcomed by Syrian authorities, who viewed it as a sign of easing tensions and a step toward rebuilding the country’s war-torn economy.

While no formal policy shift has been enacted, the possibility of sanctions relief could open pathways for international investment in Syria and signals a recalibration of U.S. strategy in the Middle East. The Syrian Foreign Ministry lauded Trump’s comments as a potential breakthrough in repairing relations with the west.

Trump also stated that “if Iran rejects [the] olive branch, we will have no choice but to inflict maximum pressure,” reiterating that U.S. policy remains contingent on compliance and good faith. His dual messaging—offering talks with Iran while threatening oil sanctions—sent mixed signals to energy markets and could add volatility in the coming sessions.

$142B U.S.-Saudi Arms Deal Adds to Market Buzz

Adding to the geopolitical weight of the day, the White House confirmed a $142 billion defense agreement with Saudi Arabia, hailed as one of the largest arms deals in U.S. history. The pact includes advanced warfighting equipment and services from over a dozen U.S. defense contractors.

The deal is part of a broader $600 billion Saudi investment plan in the U.S. economy, encompassing energy, technology, defense, and healthcare sectors. While this underscores strengthened ties between Washington and Riyadh, it also raises the geopolitical temperature at a time when the region remains tense.

Looking Ahead

Tuesday’s midday gains in tech-heavy indices underscore continued investor confidence in the resilience of the U.S. economy, especially as inflation shows tentative signs of cooling. However, the DOW’s lag and increased geopolitical activity—spanning Syria, Iran, and Saudi Arabia—highlight the cross-currents facing markets.

With inflation data largely baked in and attention turning toward monetary policy and international developments, market participants will closely watch upcoming Fed commentary and diplomatic signals from the Middle East.

For now, the Nasdaq’s rally is giving bulls room to breathe, but caution remains warranted as the path ahead looks anything but smooth.