Wall Street Sizzer not Impressed: US-China Trade Deal, Inflation Data Fails to Pop the Stock Market
Financial districts show restrained optimism upon announcement of framework accords with the People's Republic of China.
Get the lowdown on today's Wall Street happenings!
It was a lukewarm day for Wall Street on Wednesday, as positive inflation data and the US-China trade deal didn't seem to shape up to expectations. Traders seemed disillusioned with the trade pact between the world's two largest economies, opting to express disappointment instead. The Dow Jones stayed put at 42,866 points, while the S&P-500 and Nasdaq indices dipped by 0.3% and 0.5% respectively.
The outcome of the two-day negotiations in London was a sketchy framework agreement intended to get the long-awaited deal back on track in Geneva. However, market pundits detected a flimsy structure that would barely transcend the Geneva agreement, which had a short shelf life. Furthermore, Beijing raised a red flag by reserving the right to tighten exports of rare earths again. Insiders in the know claim Beijing will limit export licenses for rare earths to just half a year.
To complicate matters further, Donald Trump made it plain that the deal still needs the signatures of both leaders: him and Xi Jinping. Beijing also promised to supply "key rare earths and magnets" in advance, along with some head-scratching commentary: "We get 55 percent tariffs, China gets 10 percent." It didn't exactly clear the waters, and Richard Clarida, a former Fed representative now serving as Pimco's advisor, stated matter-of-factly that politics is now the driving force behind the economy, particularly in the US, and, increasingly, across the globe.
Trump: Trade Deal with Beijing is Still a Go
Predictable extent aside, the agreement's lack of specifics fueled skepticism on Wall Street. To add insult to injury, the US appeals court upheld Trump's reciprocal tariffs, which only served to fan the flames of uncertainty.
On the bond market, the yield on 10-year US Treasury notes slipped 6 basis points to 4.42%. Lower-than-anticipated inflation data in May fueled daydreams of rate cuts. The yields tumbled to their daily lows during a hefty demand spike at a $39 billion auction of 10-year notes, giving us a glimpse of the solid faith investors have in US bonds.
Rate-cut fantasies and the resulting bond yield drop took a toll on the dollar, with the Dollar Index diving 0.4% - the euro soared to levels not seen in nearly a week. Gold prices surged 0.8% along with the yields, with a little extra boost courtesy of the greenback's weakness.
Tesla Drives Home with Slender Gain
Elon Musk, Tesla's CEO, acknowledged that his recent rants against President Trump were "too far gone," potentially easing concerns about any retaliation by Trump against Musk's tech empire, Tesla and SpaceX. Musk also hinted at the impending launch of Tesla's highly-anticipated robotaxi service on June 22. Tesla shares inched up 0.1%.
Facebook-owned Meta Platforms shares slipped 1.2 percent. Rumors have it that Meta is in advanced talks to put $14 billion into Scale AI and bring aboard the startup's CEO to lead its AI development. Shares for Lockheed Martin dropped 4.2 percent. Apparently, the US Air Force is planning to order far fewer F-35 fighter jets than initially projected by 2024.
Gamespot, the video game retailer, registered sales in decline in the quarter but still managed to post profits. Its stock, affectionately known as the "meme stock," fell 5.4 percent. General Motors shares climbed 1.9 percent. Auto giant GM is investing $4 billion to boost production stateside, aiming to lessen its exposure to tariffs. First Solar shares surged 2 percent following an upgrade to "buy" by Jefferies. Veteran coffee mogul Howard Schultz, former and still-influential Starbucks CEO, has thrown his weight behind the coffee chain's transformation strategy, sending its stock soaring 4.4 percent.
- In the realm of Wall Street, the lukewarm response to the US-China trade deal and inflation data has raised questions about the effectiveness of current community and employment policies, as the uncertainties surrounding the agreement fuel skepticism.
- Amidst the shifting political landscape and advancements in technology, market pundits are emphasizing the crucial role of politics in shaping the global economy, such as in the case of the US and increasingly across various general-news headlines.
