The U.S. Labor Department reported that consumer prices rose slightly less than expected in April. Annual inflation slowed to 2.3% from 2.4% in March while the CPI rose 0.2% after a 0.1% dip. Core CPI, excluding food and energy, also rose 0.2% in April, up from 0.1% in March. The cooler inflation data eased fears about Trump's tariffs driving prices higher.

News about a US-China trade deal slashing steep tariffs on each other's goods also contributed to the extended rally on Wall Street. A steep drop by shares of UnitedHealth (UNH) weighed on the Dow, with the healthcare giant plunging by 17.8 percent. The nosedive by UnitedHealth came after the company suspended its full-year guidance and announced Andrew Witty is stepping down as CEO for personal reasons.

Computer hardware and semiconductor extended the surge seen during Monday's session, contributing to the strong upward move by the tech-heavy Nasdaq. Airline stocks were considerably strong, as reflected by the 2.9 percent jump by the NYSE Arca Airline Index. Oil producer, networking and brokerage stocks too saw notable strength while healthcare, biotechnology and pharmaceutical stocks significantly moved downwards.

Asia-Pacific stocks turned in a mixed performance. Japan's Nikkei 225 Index jumped by 1.4 percent, while Hong Kong's Hang Seng Index tumbled by 1.9 percent. European stocks moved modestly higher. The German DAX Index and the French CAC 40 Index both rose by 0.3 percent, although the U.K.'s FTSE 100 Index closed just below the unchanged line.

In the bond market, treasuries saw further downside following the steep drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note which moves opposite of its price, climbed 4.2 bps to a nearly three-month closing high of 4.49 percent.

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