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 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, consumer prices rose 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. 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 significant, immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand.
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 agreement in London but said that they will seek approval on the framework from the U.S. and Chinese presidents before implementing it.
Trade agreement weighs on stocks
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 at their current levels.
President Donald Trump confirmed that the deal with China is “done, subject to final approval with President Xi and me.
U.S. crude oil futures rose more than 4% on Wednesday afternoon on news of escalating tensions in the Middle East, notably after sources indicated that the U.S. is preparing a partial evacuation of its embassy in Iraq due to heightened security risks in the region. In corporate news, Jefferies upgraded J.M. Smucker to buy from hold after the food company reported disappointing earnings and guidance. Baird downgraded UnitedHealth Group to neutral, as the firm became more pessimistic about the company’s OptumHealth subsidiary.
Lockheed-Martin slumped as much as 7% after the Pentagon cut its request for new F-35 fighter jets in half. Shares of nuclear technology company Oklo surged more than 25% after the company took a step toward powering an Air Force base with its proposed advanced reactor design. The widely followed $39 billion 10-year Treasury auction showed healthy demand, providing some relief to investors worried about global demand for the government asset.
Overall, investor sentiment on Wednesday was shaped by cautious optimism over U.S.-China trade negotiations, lower-than-expected inflation data, and rising geopolitical tensions in the Middle East. Corporate news also drove significant stock movements for several companies.
