S&P 500 closes lower as investors weigh trade talks, inflation data

4:10pm: Stocks slip from highs

Stocks took a breather on Wednesday, ending the day slightly lower as investors weighed new developments in U.S.-China trade talks and a fresh read on inflation.

The Dow barely budged, closing just 1 point lower at 42,866. The S&P 500 slipped 0.3% and the Nasdaq lost 0.5%, while the small-cap Russell 2000 also fell 0.3%.

Markets wavered after U.S. and Chinese officials unveiled a framework to ease trade tensions, but the lack of a broader rollback on tariffs left investors wanting more. On the economic front, inflation came in a bit cooler than expected, offering some relief that rising prices aren’t spiraling out of control.

Treasury yields dipped in response, and attention is now turning to next week’s Federal Reserve meeting. The expectation? Rates will stay put for now, but there’s growing hope the Fed may hint at cuts down the line if inflation continues to ease.

For now, Wall Street is still hovering near record highs, with investors juggling cautious optimism around trade and Fed policy against a backdrop of global uncertainty.

3:45pm: Proactive news headlines

• Century Lithium Corp. maintained its ‘Outperform’ rating from Noble Capital after announcing a LIFE offering aiming to raise up to C$5 million through unit sales.
• OKYO Pharma Ltd. shares have nearly doubled this year, with Goldman Small Cap Research raising its price target to $8 amid clinical progress on its ocular pain treatment.
• EnWave Corp. expanded its partnership with Procescir SA de CV, allowing broader application of its REV technology to more fruit and vegetable products.
• Helium One Global Ltd. shares jumped after the company secured a Mining Licence for its Southern Rukwa project and formed a joint venture with the Tanzanian Government.
• Alvopetro Energy Ltd. is preparing for production growth in H2 2025, targeting new gas volumes from its Murucututu field in Brazil and increased drilling in Western Canada.
• Premier African Minerals Ltd. saw its shares plunge 30% after announcing a discounted £1.6 million capital raise for its Zulu Lithium and Tantalum Project.
• Pan African Resources PLC reported record H2 gold production of 112,000 ounces and expects full-year output to rise 6% to 197,000 ounces.
• Inditex shares fell 5% after Q1 results matched expectations but included a warning about a higher impact from currency fluctuations.
• Atlantic Lithium Ltd. unveiled leadership changes and cost-cutting measures, with CEO Keith Muller taking full operational control starting in July.

2:30pm: Rare earths breakthrough

A new US-China trade agreement, confirmed by President Trump, has secured upfront Chinese rare earth supplies for American industries, offering relief to key sectors like automotive, semiconductors, and smartphones that rely heavily on these critical materials.

With China dominating global rare earth production and processing, the deal is seen as a major win for US tech and a positive signal to investors, according to Wedbush, which called it "a big step forward."

However, challenges persist, as Trump also confirmed that 55% tariffs on imported hardware and e-commerce goods from China will remain in place.

1:50pm: 'Done deal'

The US and China have reached a tentative agreement aimed at easing trade tensions, following two days of high-level talks in London.

President Donald Trump announced that the deal is effectively done, pending final sign-off from both himself and Chinese President Xi Jinping.

Under the agreement, China would resume full exports of rare earth minerals, vital components in technologies like smartphones and electric vehicles, while the US would restore access for Chinese students to American universities.

US Commerce Secretary Howard Lutnick confirmed the framework addresses export restrictions on rare earths and magnets, which the US claims China has been slow to release.

In return, Washington has pledged to honour previously agreed terms, despite earlier accusations from both sides of breaching a temporary tariff truce.

12:45pm: Wall Street steady

U.S. stocks are holding their ground at midday Wednesday, as investors balance cautious optimism around a potential U.S.-China trade breakthrough with a dose of realism about what it all really means.

The Dow Jones Industrial Average is leading the charge, up 0.4%, while the S&P 500 is inching higher by 0.1%. The Nasdaq Composite is hovering near the flatline, as tech names tread water after recent gains.

Today’s action comes on the heels of a cooler-than-expected inflation reading, which helped steady nerves early on. But the bigger story is the tentative trade agreement between the U.S. and China — a deal that President Trump says is “done,” pending final sign-off from both sides.

The agreement, struck during two days of high-level talks in London, includes U.S. access to rare earth metals, and a resumption of Chinese student visas — both issues that had become flashpoints in the broader U.S.-China standoff.

While markets are reacting positively to the news, Nigel Green, CEO of global asset manager deVere Group, is urging investors to look beyond the headlines.

“This is a headline-friendly development and markets will understandably welcome it,” Green said in a note. “But beneath the surface, nothing fundamental has changed. This isn’t a breakthrough — it’s a partial restoration of a fragile status quo.”

In other words: the tariffs are still there, the export bans still sting, and the broader strategic rivalry between Washington and Beijing shows no signs of going away.

“The reality is that this trade truce — if that’s really what it is — mostly returns us to the already-tense conditions that existed before early April,” Green explained, pointing to persistent restrictions on advanced AI chips, semiconductors, and critical minerals.

“Beijing isn’t getting access to the U.S. auto market, and Washington isn’t about to start selling its high-end AI technology,” he added. “Neither side is treating the other all that differently than before this agreement.”

The deal may ease tensions temporarily, Green says, but it doesn't address the structural decoupling taking place across supply chains, trade routes, and digital infrastructure.

“Two economic systems are forming,” he warned. “The U.S. and its allies on one track, China and its partners on another.”

Still, Green acknowledged that the short-term impact on markets could be positive, especially for sectors tied to global trade flows, semiconductors, logistics, and consumer electronics. But he cautioned against complacency.

“Volatility will ease briefly, but the structural risk is still there,” he said. “This deal is good news for today’s markets. But tomorrow’s outlook is shaped by bigger forces.”

For now, markets are walking that fine line — buoyed by the prospect of reduced tensions, but wary of what lies ahead.

11:35am: Inflation MIA

Cooler US inflation supported US stocks on Wednesday as the US and China move closer to a trade deal.    

Late morning, the Dow Jones had added 0.4%, while the S&P 500 and Nasdaq both added 0.2%.

“Inflation remains MIA”, IG chief market analyst Chris Beauchamp said, noting that today’s CPI reading came amid fears tariffs would impact the figures.

“US stocks were higher in the wake of the news, which helped to banish the US-China talks from everyone’s minds,” Beauchamp said.

“The talks ended today with no real change to the Geneva agreement, reinforcing the view that the whole tariff drama has been mostly performative. 55% tariffs on Chinese goods are not to be sniffed at, however, but how much of this will be mitigated by some fancy shipping footwork remains to be seen.”

10:45am: CPI reading good news for Fed

Wednesday’s inflation reading is welcome news for investors and policymakers alike, reinforcing the view that inflationary pressures are easing, Wells Fargo economists believe.

However, they cautioned against premature optimism.

“We believe it is too early to declare victory and say that the significant increase in tariffs over the past few months will have no material impact on consumer price growth,” they wrote.

With most of the tariff hikes occurring between March and May, they doubth that enough time has elapsed for the full effects of these policy changes to be felt on output, hiring and pricing.

Looking ahead, Wells Fargo continues to expect some reacceleration in inflation later this year, projecting core CPI to rise to a little over 3% the next few quarters, largely due to higher tariffs.

For now, they believe the Federal Reserve is unlikely to adjust its policy stance. “The FOMC will likely be content to stand pat at its meeting next week and await the next round of economic data,” they wrote.

The CPI rose just 0.1% in May, with year-over-year inflation slowing to 2.4% Core CPI, which excludes volatile food and energy prices, also posted a modest 0.1% monthly increase, coming in below consensus expectations.

9.55am: Stocks searching for direction

Wall Street stocks were searching for direction in early trading on Wednesday. 

The S&P 500 rose initially, then fell into the red and was lately up 0.1% at 6,045.60.

Same story for the Dow Jones and Nasdaq, now up 0.2% and 0.1% respectively.  

The Russell 2000 index of mostly small and mid-cap stocks has risen 0.3%.

Top of the S&P risers are Warner Bros Discover and Starbucks, with the latter saying it has received "a lot of interest" from potential partners interested in a stake in its China business.

Fallers are led by Lockheed Martin, Nucor Corp and Intel.

8.46am: Trump says 'deal is done', as CPI inflation comes out  

US consumer price inflation eased in May, sending stock futures higher and Treasury yields lower. 

The consumer prices index was up 0.1% month-on-month, down from 0.2% in April, with core CPI exactly the same. 

On an annual basis, US CPI was up 2.4%, increasing from 2.3% previously, as expected.

US core CPI was up 2.8% year-on-year, the same as the previous month.

At the same time as the inflation release, President Trump posted on social media saying "our deal with China is done". 

In an ALL CAPS statement on Truth Social, he says the deal is "subject to final approval with President Xi and me".

Trump says, "full magnets, and any necessary rare earths, will be supplied, up front, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!)."

"We are getting a total of 55% tariffs, China is getting 10%. Relationship is excellent! Thank you for your attention to this matter!"

The White House clarified that this means the US is keeping a 10% baseline tariff, plus 20% fentanyl tariff on China, with Trump to hold the extra China tariffs at 30%.

8am: Stock futures in red

US stock futures were pointing to a small decline on Wednesday morning, while traders awaited key inflation data ahead of the opening bell.

Investors also were digesting the limited progress from US-China trade talks in London.

This comes after more modest gains on Wall Street the day before.

The Dow Jones climbed 105 points to finish at 42,867, up 0.3%. The S&P 500 added 33 points to close at 6,039, while the Nasdaq jumped 124 points, ending the day at 19,715.

The moves extended a five-week rally that has seen all four major indices claw back steep April losses, with the S&P and Nasdaq within reach of their record February highs.

Markets seemed to take little confidence from comments from US Commerce Secretary Howard Lutnick, who confirmed that a “framework” agreement had been reached with China.

The deal is said to focus on reviving trade in sensitive goods and builds on last month’s Geneva accord, which delayed a fresh round of tariffs.

However, with the details still vague and final sign-off required from Presidents Trump and Xi, market participants have stopped short of declaring victory.

Market analyst David Morrison said markets were left "in limbo" but "there was widespread relief that the talks ended amicably enough, without either side storming off in a huff".

The European morning session saw investors trim positions ahead of today’s US CPI data, where headline and core CPI are both forecast to tick slightly higher year-on-year.

The Federal Reserve is expected to hold rates steady next week – as implied by CME’s FedWatch Tool – today’s figures are unlikely to shift the monetary policy narrative significantly.

In commodities, crude oil prices firmed modestly in early trade. WTI front-month futures reclaimed the $65 level – a key technical zone that has capped the market since early April. 

Tesla shares were up 2.7% premarket after boss Elon Musk sent an early morning tweet saying "I regret some of my posts about President Trump last week, They went too far,".

Analysts at Wedbush said it was "an important step" as "Musk needs Trump and Trump needs Musk".