Stocks close lower as trade deal disappoints, despite cool inflation
U.S. stocks closed lower as investors assessed little progress on trade talks, after jumping in the morning on a cooler-than-expected inflation reading.
The Dow Jones Industrial Average fell 1 point to close at 42,865.77, while the S&P 500 Index lost 16.51 points to settle at 6,022.30. The Nasdaq Composite was down 99.11 points, 0.5%, to 19,615.88
Consumer prices rose 2.4% from a year earlier, up from a four-year low of 2.3% the previous month, the Labor Department said Wednesday morning. That was more modest than expected. On a monthly basis, costs increased just 0.1%, less than projected, after rising 0.2% in April.
President Donald Trump and Chinese officials announced they have agreed to a framework for a trade deal between the two countries, setting tariffs, allowing Chinese students to attend U.S. universities and easing restrictions on trade in rare earths.
Treasury Secretary Scott Bessent also told Congress that it is "highly likely" that the White House will continue to hold off on implementing steep new U.S. tariffs on other countries, if those countries are negotiating "in good faith."
Economic news
The May inflation reading reflected the first full month of price data since Trump announced his aggressive tariff plan on April 2.
"The inflation shock wave from more costly imported goods has yet to arrive on American shores," said Chris Rupkey, chief economist with FWDBONDS LLC. "Today’s consumer inflation report is a real head-scratcher for economists as they ponder why the trade war hasn’t set off another inflation outbreak yet with core goods prices sitting on store shelves seeing no change in May. The only problem with the consumer no-inflation report is that good news may actually be bad news in disguise if the lack of upward price pressures is because of a weakening economy with less consumer demand."
Futures traders now see more likelihood that interest rates will be lower by the time the Federal Reserve meets in September than that they will remain the same.
Bonds gained, with the 10-year U.S. Treasury note ticking down 6 basis points to about 4.41%. Bond yields fall as prices rise.
Corporate news
- Dave & Buster’s reaffirmed its full-year guidance and said data so far in June were encouraging. Shares jumped nearly 18%.
- GitLab topped analyst estimates in the company's first three months of the year but its second-quarter outlook was soft. The stock slumped more than 10%.
- Tesla stock closed slightly higher on Wednesday after CEO Elon Musk said on social media that he regretted some of his posts about President Trump, adding, “They went too far.”
- Pet retailer Chewy beat on sales and earnings, but the stock slid 11% after a big run-up in recent months.
Medora Lee is a money, markets, and personal finance reporter at Paste BN. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.