U.S. stocks closed lower on Wednesday as investors balanced softer-than-expected inflation data with cautious optimism over China-U.S. trade discussions. The Dow Jones Industrial Average edged down 1.10 points to 42,865.77, while the S&P 500 and Nasdaq Composite fell 0.27% and 0.50%, respectively, reflecting broad market uncertainty.
Consumer discretionary and materials sectors led declines, dropping over 1%, while energy stocks rose 1.49% amid higher oil prices. The muted response followed the conclusion of trade talks between China and the U.S., though details of the discussions remain undisclosed.
Investor sentiment initially improved after May’s Consumer Price Index (CPI) showed a 0.1% monthly rise, below the 0.2% forecast. Core CPI held steady at 2.8% annually, fueling speculation that the Federal Reserve may cut rates in September. Treasury yields dipped to 4.41%, with markets now pricing in a 57.2% chance of a rate cut, per the CME FedWatch Tool.
Bank of America economist Stephen Juneau noted the data reduces “the chances of a nasty bout of stagflation,” but economist Claudia Sahm warned against overinterpreting short-term trends, citing lingering impacts of U.S. trade policies.
Tech stocks largely retreated, with Apple and Amazon down 2%, while Intel plunged 6.46%. Broadcom and Microsoft bucked the trend, rising over 3% and slightly, respectively.
