The S&P 500 lost 0.27% to end the day at 6,022.24 on Wednesday. This snapped a three-day winning streak for the index. The Nasdaq fell 0.5% to 19,615.88.
The Dow Jones Industrial Average shed just 1.1 points, closing at 42,865.77. Inflation rose by 0.1% in May compared to April. This was less than the 0.2% increase economists had predicted.
Core CPI, which excludes food and energy prices, also increased by 0.1%. This suggests inflation was lower than anticipated. “Inflation in May was lower than anticipated, suggesting the tariffs aren’t having a substantial immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand,” said Alexandra Wilson-Elizondo, global co-CIO of multi-asset solutions at Goldman Sachs Asset Management.
“As we wait for the 90-day tariff pause to pass, the market will be caught between inflation and job prints.
Inflation data and market reactions
If inflation stays under control or the job market weakens, the Federal Reserve will likely consider cutting interest rates down the road,” Wilson-Elizondo added.
U.S. and Chinese officials reached a preliminary trade agreement framework in London this week. As part of the deal, China would approve rare earth mineral exports. The U.S. would roll back restrictions on selling advanced technology to China.
The framework still needs approval from the U.S. and Chinese presidents before being implemented. U.S. crude oil futures jumped more than 4% on Wednesday afternoon. This came amid reports of rising tensions in the Middle East.
Sources said the U.S. is preparing to partially evacuate its embassy in Iraq due to increased security risks in the region. In other market news, Jefferies upgraded J.M. Smucker to a “buy” rating. Baird downgraded UnitedHealth Group to “neutral.” Lockheed-Martin shares slumped as much as 7% on a report that the Pentagon cut its request for new F-35 fighter jets in half.
