The dollar fell and major U.S. stock indexes rose on Tuesday on news that U.S. consumer inflation picked up less than expected in April when President Donald Trump unveiled a raft of tariffs that has wreaked havoc on global markets.

At least one official at the Federal Reserve is still skeptical about the trajectory of inflation and the economy, despite developments this week that cheered investors.

Consumer prices rose 2.3% in April compared to a year ago, cooling slightly from the previous month and defying fears of an inflation surge in the aftermath of President Donald Trump's "Liberation Day" tariffs last month. The reading -- which marked the lowest inflation rate since 2021 -- matched economists' expectations.

The S&P 500 and the Nasdaq closed higher on Tuesday for a second straight day after softer-than-expected inflation numbers added to investor optimism from Monday when the U.S. and China announced a trade truce.

This week, mortgage rates are mainly driven by headlines about ongoing trade negotiations and the bond market’s reaction to tomorrow’s inflation data. On Monday, the White House announced a 90-day “reset” on steep tariffs with China,

Risky assets were again popping on Tuesday afternoon, as markets returned to risk-on mode after April consumer-price-index report showed inflation came in cooler than expected. "The softer \[inflation\] figures are adding to confidence that the Trump policy mix won’t produce much inflation,

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US stocks surged to close near the highs of the session on Monday after a US-China deal to temporarily slash reciprocal tariffs offered relief to markets worried about a trade war. Wall Street notched a banner day after the US and China put tariffs on pause for 90 days,

Markets have welcomed the first US trade deal since Liberation Day, although the British-American agreement is hardly a game-changer for either of the two countries. The dollar is benefiting from Trump shifting to market-appeasing mode, but likely requires more positive trade developments, especially on China, to continue recovering

Since winning the White House, Trump has lobbied for rate cuts to come down. Since then he has flip-flopped on whether or not he will try to fire Powell, with the Fed chairman countering that it wouldn't be legal for Trump to push him out.

As the Federal Reserve holds interest rates steady in May, Fed Chair Jerome Powell stated that the risks of higher unemployment and inflation "have risen" in a press conference following the central bank's FOMC meeting.