US STOCKS-S&P 500, Nasdaq rise on soft inflation data, trade optimism

By Sinéad Carew and Shashwat Chauhan

May 13 (Reuters) - The S&P 500 and the Nasdaq advanced on Tuesday after softer-than-expected inflation numbers added to investor optimism, which was already bolstered on Monday by a U.S.-China trade truce.

The Dow .DJI fell, however, with the biggest weight being UnitedHealth's UNH.N 16% slide after the insurance bellwether suspended its annual forecast and its CEO stepped down.

U.S. consumer prices rebounded moderately in April, with headline inflation increasing 0.2% last month after dipping 0.1% in March. Economists polled by Reuters had forecast that the CPI would rise 0.3%.

The CPI climbed 2.3% in the 12 months through April, after advancing 2.4% in the 12-month period until March.

"The sustainability of the carry-through from yesterday is positive. There was nothing in CPI to throw it off," said Carol Schleif, chief market strategist at BMO Private Wealth in Minneapolis.

Schleif described Monday's improvement in U.S. and China trade relations as going "from iceberg to 80 degrees spring day overnight" and said the 90-day pause on tariffs came in time for retailers to import goods to build up stocks for back-to-school and year-end holiday shopping.

Monday's relief rally followed Washington and Beijing's agreement to dial back stringent reciprocal tariffs, signaling a joint effort to stave off a global economic downturn.

The U.S. will temporarily lower the extra tariffs it imposed on Chinese imports to 30% from 145% for three months, while Chinese duties on U.S. imports will fall to 10% from 125% in the same period.

After the tariff truce, multiple brokerages lowered their odds of a U.S. recession.

At 2:05 p.m. EDT, the Dow Jones Industrial Average .DJI fell 148.42 points, or 0.35%, to 42,261.68, the S&P 500 .SPX gained 54.05 points, or 0.92%, to 5,898.09 and the Nasdaq Composite .IXIC gained 316.71 points, or 1.69%, to 19,025.06.

With Tuesday's gains, the S&P 500 turned positive for the year-to-date for the first time since March 3.

Among the S&P 500's 11 major industry sectors, technology .SPLRCT was the biggest gainer, up 2.1%, while healthcare .SPXHC was the biggest loser, down 2.3%.

The S&P 500 and the Nasdaq have recovered losses since April 2 - or "Liberation Day" - when U.S. President Donald Trump announced sweeping reciprocal tariffs.

A 90-day pause announced on April 9 for countries other than China, along with solid earnings reports and a limited U.S.-UK trade agreement last week, helped the S&P 500 and the tech-heavy Nasdaq regain lost ground.

However, traders leaned in to bets that the U.S. Federal Reserve would hold off on lowering interest rates until September, while still anticipating two 25-basis-point cuts by the end of the year.

A number of Fed officials are slated to speak this week, including Chair Jerome Powell on Thursday.

Crypto exchange operator Coinbase Global COIN.O, which is slated to join the S&P 500 on May 19, was among the top movers, jumping 22.5%.

With more than 90% of S&P 500 companies having reported earnings, numbers from retail giant Walmart WMT.N will be on the radar later this week.

Advancing issues outnumbered decliners by a 1.93-to-1 ratio on the NYSE where there were 156 new highs and 68 new lows.

On the Nasdaq, 2,539 stocks rose and 1,838 fell as advancing issues outnumbered decliners by a 1.38-to-1 ratio. The S&P 500 posted 18 new 52-week highs and 6 new lows while the Nasdaq Composite recorded 67 new highs and 60 new lows.