The S&P 500 index closed lower on Wednesday, snapping a three-day winning streak. Traders weighed a preliminary U.S.-China trade agreement and new inflation data. The market’s recent run higher took a breather as major indexes ended the session near previous closing levels.
The S&P 500 lost 0.27% to end the day at 6,022.24. The Nasdaq fell 0.5% to 19,615.88. The Dow Jones Industrial Average shed a mere 1.1 points, closing at 42,865.77.
Inflation in May increased by 0.1% from April, less than the 0.2% estimate from economists polled by Dow Jones. Core CPI, which strips out volatile food and energy prices, also increased 0.1%, less than expected.
Inflation data dampens S&P 500 gains
Alexandra Wilson-Elizondo, global co-CIO of multi-asset solutions at Goldman Sachs Asset Management, said, “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.”
She added, “If inflation stays under control or the job market weakens, the Federal Reserve will likely consider cutting interest rates down the road.”
Discussions between U.S. and Chinese officials have been a key focus this week for investors. Officials reached an agreement in London, but stated that they will seek approval on the framework from the U.S. and Chinese presidents before implementing it. As part of the framework, China would approve the exports of rare earth minerals while the U.S. would roll back restrictions on the sale of advanced technology to China.
Commerce Secretary Howard Lutnick said Wednesday that U.S. tariffs on Chinese imports will remain unchanged from their current levels. President Donald Trump announced that the trade deal with China is “done, subject to final approval with President Xi and me.”
Under the deal, China will supply magnets and “any necessary rare earths” upfront, and the U.S. will allow Chinese students to attend U.S. colleges and universities. In other news, U.S. crude oil futures rose more than 4% on Wednesday afternoon on news of escalating tensions in the Middle East.
The U.S. is preparing a partial evacuation of its embassy in Iraq due to heightened security risks in the region. The decline in major indices was also influenced by shares of GameStop sliding after the company reported a decline in quarterly revenue. Analysts and traders are now looking ahead to further information on the anticipated trade deal, which could provide more clarity and potentially stabilize market conditions.