The S&P 500 closed lower on Wednesday, ending 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 Dow Jones Industrial Average fell 0.5% to 19,615.88. The Nasdaq Composite shed a mere 1.1 points, closing at 42,865.77.
In May, inflation data showed that consumer prices 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 by 0.1%, below expectations. 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.
As we wait for the 90-day tariff pause to pass, the market will be caught between inflation and job prints.
S&P 500 takes a pause
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 who remain on edge regarding trade policy.
Officials reached a preliminary framework in London, which will seek approval from U.S. and Chinese presidents before implementation. 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 mentioned that U.S. tariffs on Chinese imports would remain at their current levels.
President Donald Trump noted that the deal with China is “done, subject to final approval with President Xi and me.” As part of the deal framework, China would supply necessary rare earths, and the U.S. would allow Chinese students to attend U.S. colleges and universities. In other market news, U.S. crude oil futures rose more than 4% on Wednesday afternoon following news of escalating tensions in the Middle East. Jefferies upgraded J.M. Smucker to a buy rating, while Baird downgraded UnitedHealth Group to a neutral rating.
The $39 billion 10-year Treasury auction provided some relief to investors concerned about global demand for government assets. Lockheed-Martin slumped as much as 7% after the Pentagon cut its request for new F-35 fighter jets in half. Oklo surged more than 25% after receiving a notice that it might win a contract to power an Air Force base, while Chewy slipped nearly 5% after GameStop posted lower-than-expected first-quarter revenue.