U.S. stocks ended Tuesday on a positive note, driven by renewed optimism surrounding the ongoing trade discussions between the United States and China. The S&P 500 rose 0.3%, the Dow Jones Industrial Average added 31 points (0.1%), and the NASDAQ Composite also gained 0.3%.
Positive Momentum in US-China Trade Talks
Investor sentiment was lifted after U.S. Commerce Secretary Howard Lutnick reported encouraging developments during the second day of trade negotiations with China. “Talks are going well,” Lutnick said, noting that discussions could extend into Wednesday if needed. “I hope they end this evening, but if they need to, we’ll be here tomorrow.”
The talks follow a recent agreement between the two nations to ease tariffs introduced during the protracted trade conflict. Current discussions are believed to center around sensitive issues such as China’s restrictions on rare earth exports and the U.S.’s limitations on chip sales to Chinese firms—both of which have implications for global supply chains.
Despite optimism, analysts at Capital Economics advised caution, suggesting that while a breakthrough could stabilize markets, a dramatic shift is unlikely. “We wouldn’t bank on a big turnaround,” the firm noted, emphasizing that domestic policies, rather than tariffs alone, play a more significant role in driving Chinese equities. They added that any relief rally would likely be tempered, as the U.S. is unlikely to fully retreat from its trade stance.
All Eyes on Upcoming Inflation Data
With limited economic data released Tuesday, investor focus is shifting toward Wednesday’s Consumer Price Index (CPI) report. Economists expect inflation to show an uptick, partly due to higher import prices stemming from tariff impacts. The inflation data could influence the Federal Reserve’s future interest rate decisions.
Strategists at Citi forecast the Fed will maintain its current rate range of 4.25% to 4.5% through its June and July meetings. However, they expect the central bank to begin easing in September, with 25-basis-point cuts at each meeting through March 2026, totaling 125 basis points in reductions. “The Fed is on hold, but cuts are still coming,” Citi wrote in a client note.
Apple Gains Slightly Despite Muted AI Announcements
Apple Inc. (NASDAQ: AAPL) closed modestly higher following its annual Worldwide Developers Conference, where it unveiled new artificial intelligence features including live phone call translations. However, the announcements were perceived as underwhelming by investors anticipating more ambitious advancements in the AI space.
Earnings Movers: Smucker, Designer Brands, TSMC, McDonald’s
Elsewhere, The J.M. Smucker Company (NYSE: SJM) saw its shares tumble after missing earnings expectations, citing a “dynamic and evolving external environment” influenced by trade tensions.
Footwear retailer Designer Brands (NYSE: DBI) also slumped after falling short on first-quarter earnings and retracting its full-year outlook due to ongoing macroeconomic uncertainty.
In semiconductors, Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) surged 4% after posting a nearly 40% year-over-year revenue jump in May.
Meanwhile, McDonald’s Corporation (NYSE: MCD) dropped over 1% after Redburn Atlantic issued a double downgrade to “sell,” citing concerns over declining foot traffic and the potential impact of GLP-1 weight-loss drugs on consumer behavior.
Leave a Reply