Markets retreat slightly as US inflation data calms some rate concerns, while tech stocks and trade updates take center stage.
US stocks ended slightly lower Wednesday as investors absorbed a mix of economic data and trade signals, while shares of major technology firms weighed on indexes.
The S&P 500 fell 0.3% to 6,022.24, its first decline in four sessions. The Nasdaq composite dropped 0.5% to 19,615.88, and the Dow Jones Industrial Average slipped by 1.10 points to 42,865.77. The pullback came as the market hovered within 2% of its record high, according to data reported by BNN Bloomberg.
Large technology stocks led the day’s losses. Apple declined 1.9% after presenting modest updates to its software platforms earlier in the week. The lack of major product developments appeared to temper investor enthusiasm. Other tech firms followed suit, dragging the Nasdaq lower.
Meanwhile, May’s consumer price index rose 2.4% year-over-year, a slight uptick from April’s 2.3% but short of Wall Street’s forecast of 2.5%. The data added to a growing debate about whether inflation will remain stable or pick up again due to lingering effects of tariffs imposed during President Donald Trump’s administration.
While the inflation report showed prices continuing to rise, many investors viewed the outcome as manageable in the short term. BNN Bloomberg reported that some analysts still expect a delayed impact from trade-related costs, particularly if additional tariffs are introduced.
“Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remain,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
Following the data, bond yields retreated. The 10-year US Treasury yield slipped to 4.41% from 4.47% the previous day. Yields on shorter-term debt, often tied to Federal Reserve expectations, declined more sharply. Traders increasingly see two interest rate cuts by the Fed as possible before the end of 2024.
The Fed has held its benchmark rate steady since the beginning of the year after easing late in 2023. Some economists, including Brian Jacobsen of Annex Wealth Management, suggest that current inflation and growth trends could support a shift in Fed policy toward additional cuts.
Trade developments between the US and China also remained in focus. Trump said the two sides agreed on continued Chinese exports of rare-earth minerals and magnets to the US, and that Chinese students would be allowed entry into American universities. He also indicated ongoing discussions with Chinese President Xi Jinping about expanding trade access, though no formal agreement has been signed.
According to BNN Bloomberg, optimism around potential trade deals has helped lift the S&P 500 nearly back to its previous peak after it had dropped about 20% earlier in the year.
Elsewhere in the market, Chewy declined 11% after its earnings report fell short of analyst estimates. Tesla fluctuated throughout the day before ending 0.1% higher. CEO Elon Musk moderated earlier comments about his relationship with Trump that had raised investor concerns last week.
International markets saw mixed results. Most European indexes closed lower, while South Korea’s Kospi gained 1.2%.
