Trade Truce Teetering? Inflation Report Could Rock the Boat!

Futures Slip as Investors Await Details on China-U.S. Trade Framework; Inflation Report Looms

U.S. stock futures experienced a slight downturn early Wednesday as investors eagerly await further details regarding the recently established trade policy consensus between the United States and China. Simultaneously, market participants are keenly anticipating the release of May's crucial consumer inflation report, which could significantly influence market sentiment.

As of early morning trading:

• S&P 500 futures were down by 0.34%.
• Nasdaq 100 futures edged lower by 0.38%.
• Dow Jones Industrial Average futures slipped by 108 points, equivalent to a 0.25% decrease.

The market's cautious stance reflects the delicate balance between optimism surrounding potential trade resolutions and concerns about persistent inflationary pressures.

U.S.-China Trade Talks: A Tentative Consensus

Following two days of discussions in London, U.S. and Chinese officials have reportedly reached a consensus on trade, according to an NBC transcript. U.S. Commerce Secretary Howard Lutnick indicated that he and U.S. Trade Representative Jamieson Greer will return to Washington, D.C., to secure President Trump's approval of the proposed framework. Prior to this announcement, Treasury Secretary Scott Bessent had stated his intention to return to the U.S. to testify before Congress on Wednesday.

These discussions hold significant importance for investors, given the market's sensitivity to any shifts in trade policy. While both nations previously agreed to a temporary pause on imposing high tariffs in May, a comprehensive and finalized agreement remains elusive.

Market Performance and Lingering Concerns

In Tuesday's regular trading session, the S&P 500 advanced by approximately 0.6%, marking its third consecutive positive session. The broad market index is now less than 2% below its February high. The Nasdaq Composite also gained 0.6% on Tuesday, while the Dow Jones Industrial Average climbed 0.3%.

Despite the recent resurgence in stocks, Deutsche Bank cautions that tariff anxieties and rising bond yields could cast a shadow over the market.

Key concerns highlighted by Deutsche Bank include:

• The potential for the Trump administration to resume aggressive tariff rhetoric, fueled by the market's rebound.
• The risk of renewed retaliation from China and Europe, reminiscent of earlier this year.
• Rising long-end bond yields amplifying fiscal concerns globally, particularly in light of plans for expanded deficits across multiple major economies.
• Concerns that several countries are already on unsustainable debt paths, potentially accelerating an inevitable reckoning.

Inflation Report in Focus

Investors are bracing for the release of May's consumer price index (CPI) by the Bureau of Labor Statistics on Wednesday morning. Economists surveyed by Dow Jones anticipate a 0.2% month-over-month increase, with headline CPI expected to have risen by 2.4% compared to the previous year. A higher-than-expected report could unsettle investors already wary of inflationary pressures.

Sam Millette, director of fixed income at Commonwealth Financial Network, suggests that this report is unlikely to trigger significant changes in the Federal Reserve's current "wait and see" approach to setting interest rates. However, he acknowledges the need to assess whether the report aligns with the anticipated modest rise in price pressure or if any unexpected surprises await investors.

Earnings Watch

On the earnings calendar for Wednesday, traders will be closely monitoring reports from Chewy and Oracle.

Conclusion

As investors navigate the complexities of U.S.-China trade relations and the looming inflation report, a cautious approach seems prudent. The interplay between these factors will likely shape market direction in the near term. Staying informed and adapting to evolving conditions will be key to weathering any potential volatility and capitalizing on emerging opportunities. The market's resilience will be tested, but with a clear understanding of the economic landscape, investors can navigate these uncertainties with greater confidence.

-- CNBC's Evelyn Cheng contributed reporting.

Tags: US stock market, stock futures, S&P 500, Nasdaq 100, Dow Jones, trade policy, US China trade, inflation report, Howard Lutnick, Jamieson Greer

Source: https://www.cnbc.com/2025/06/10/stock-market-today-live-updates-.html