The S&P 500 concluded the trading session with a decline, thereby interrupting its three-day streak of gains. Equities experienced a decline on Wednesday as market participants assessed a preliminary trade agreement between the U.S. and China alongside newly released inflation figures. The recent upward momentum in the market experienced a pause, with major indexes concluding the session close to their prior closing levels. The S&P 500 experienced a decline of 0.27%, concluding the day at 6,022.24, thereby interrupting a three-day winning streak. The Nasdaq Composite experienced a decline of 0.5%, closing at 19,615.88. The Dow Jones Industrial Average experienced a slight decline of 1.1 points, concluding the session at 42,865.77.
The consumer price index increased by 0.1% in May compared to April, falling short of the 0.2% forecast provided by economists surveyed by Dow Jones. Core CPI, excluding the more volatile food and energy prices, rose by 0.1%, falling short of expectations. “Inflation in May was lower than anticipated, suggesting the tariffs aren’t having a large immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand,” stated Alexandra Wilson-Elizondo, global co-CIO of multi-asset solutions at Goldman Sachs Asset Management.
As the 90-day tariff pause approaches, the market finds itself navigating the complexities of inflation and employment data. “If inflation remains manageable or the labor market shows signs of deterioration, the Federal Reserve is expected to contemplate reducing interest rates in the future,” Wilson-Elizondo stated. Conversations between U.S. and Chinese officials have captured significant attention this week, as investors remain apprehensive about trade policy developments.
After two days of discussions in London, officials have arrived at a consensus; however, they indicated that they will pursue approval of the framework from the presidents of the U.S. and China prior to its implementation. Under the proposed framework, China is set to authorize the export of rare earth minerals, while the United States plans to ease restrictions on the sale of advanced technology to China. Despite the ongoing finalization of the framework, Commerce Secretary Howard Lutnick stated on Wednesday that U.S. tariffs on Chinese imports will remain at their current levels.
President Donald Trump stated in a post on Truth Social that the agreement with China is “done, subject to final approval with President Xi and me.” In the context of the agreement, he indicated that magnets and “any necessary rare earths” will be provided initially by China, while the U.S. will permit Chinese students to enroll in American colleges and universities, noting that “WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%.”
U.S. crude oil futures experienced an increase of over 4% on Wednesday afternoon, driven by reports of escalating tensions in the Middle East. This surge followed information from sources indicating that the U.S. is planning a partial evacuation of its embassy in Iraq, prompted by rising security concerns in the area.