S&P 500 ends lower; traders focus on Middle East tension and await details on trade deal
The S&P 500 ended lower on Wednesday, with investors spooked by
Middle East tensions
, while a tame
inflation report
calmed concerns around tariff-driven price pressures and traders awaited more details on China-U.S. trade talks.
Wall Street erased modest gains after sources said the United States is preparing a partial evacuation of its Iraqi embassy due to heightened security risks in the region. A senior Iranian official said earlier that Tehran will strike U.S. bases in the region if nuclear negotiations fail and conflict arises with the United States.
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Amazon lost 2% and Nvidia dipped 0.8%, with both weighing on the S&P 500.
Data showed consumer prices increased only marginally in May, while economists expect inflation to accelerate in the coming months due to the Trump administration's import tariffs.
Annually, headline inflation stood at 2.4%, lower than the 2.5% rise estimated by economists polled by Reuters.
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"There's still concern about Trump's tariffs being inflationary but this report was better than expected and it fuels hope that the Federal Reserve will be able to step in with rate cuts later on this year," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
Traders project a 70% chance that the Federal Reserve will cut interest rates by its September policy meeting, according to the CME Group's FedWatch tool.
A U.S.-China trade deal is "done," U.S. President Donald Trump said , hours after negotiators from Washington and Beijing agreed on a framework to get a fragile trade truce back on track and remove Chinese export restrictions on rare earth minerals and other critical industrial components.
The S&P 500 declined 0.27% to end the session at 6,022.24 points.
The Nasdaq declined 0.50% to 19,615.88 points, while the Dow Jones Industrial Average ended essentially unchanged at 42,865.77 points.
Of the 11 S&P 500 sector indexes, seven declined, led lower by consumer discretionary, down 1.02%, followed by a 0.98% loss in materials.
With investors betting the United States will reach trade agreements that reduce Trump's steep trade barriers, the S&P 500 is now trading just below its February record high.
"The worst-case scenario is probably behind us. There's a little bit of face-saving for both sides," said John Praveen, managing director at Paleo Leon in Princeton, New Jersey. "They got an agreement. The question is whether it will be implemented."
According to a White House official, the agreement with China allows the U.S. to charge a 55% tariff on imported Chinese goods, including a 10% baseline "reciprocal" tariff, a 20% tariff for fentanyl trafficking and a 25% tariff reflecting pre-existing tariffs. China will charge a 10% tariff on U.S. imports, the official said.
Tesla
edged up 0.1% after CEO Elon Musk said he regretted some of the negative social media posts he made last week about Trump as they had gone "too far".
The U.S. stock market has rallied in recent weeks, recovering from a slump in April sparked by Trump's "Liberation Day" tariffs.
Software development platform provider
GitLab
fell almost 11% after its quarterly results disappointed investors.
Shares of videogame retailer
GameStop
dropped 5.3% after it reported a decline in first-quarter revenue.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.9-to-one ratio.
The S&P 500 posted 11 new highs and 2 new lows; the Nasdaq recorded 80 new highs and 43 new lows.
Volume on U.S. exchanges was relatively heavy, with 18.9 billion shares traded, compared to an average of 17.8 billion shares over the previous 20 sessions.
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