U.S. Stocks Hover Near Records After Mild Inflation Report/ Newslooks/ Washington/ J. Mansour/ Morning Edition/ U.S. stocks rose slightly Wednesday following a softer-than-expected inflation report. Investors remain cautious but optimistic that Trump’s tariffs haven’t yet significantly driven up prices. The S&P 500 inched closer to its all-time high as bond yields eased and tech stocks recovered.
Stocks and Inflation Trends Quick Looks
- S&P 500 up 0.1%, Dow Jones +0.2%, Nasdaq +0.2% in early trading.
- Inflation rose to 2.4% in May, below Wall Street’s 2.5% expectation.
- Trump’s tariffs haven’t yet driven significant inflation, but risks persist.
- Treasury yields eased as bond markets responded to inflation data.
- Investors still hopeful for broader U.S.-China trade agreement.
- Trump confirms rare-earth mineral deal with China; student visas also included.
- Fed rate cut hopes rise as inflation cools and economic growth slows.
- Tesla rebounds after Musk softens feud with Trump.
- Chewy shares plummet 11.8% after disappointing quarterly earnings.
- Global stock indexes mostly positive, with South Korea’s Kospi up 1.2%.
Markets React Calmly as Inflation Remains Contained – Deep Look
NEW YORK — U.S. stocks hovered near record highs on Wednesday after a key inflation report revealed milder price increases than expected, calming fears that President Donald Trump’s aggressive tariff policy might stoke another round of rising costs.
The S&P 500 edged up 0.1% in morning trading, closing in on its February peak. The Dow Jones Industrial Average added 73 points (0.2%), while the tech-heavy Nasdaq composite gained 0.2%. Investors responded positively to fresh inflation data, which suggested that price increases are still manageable despite trade tensions.
According to the U.S. Labor Department, consumer prices were 2.4% higher in May compared to the previous year. That figure edged up from April’s 2.3%, but fell short of the 2.5% rise forecasted by analysts. Core inflation, which excludes food and energy, remained stable.
Although President Trump’s wide-reaching tariffs had raised alarms about a resurgence in inflation, recent data indicate that businesses may be absorbing higher import costs or relying on existing inventory instead of immediately passing price hikes to consumers.
“Another month goes by with little evidence of tariffs driving inflation,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management. “But the long-term risks remain very real.”
Meanwhile, Treasury markets responded with a dip in yields. The 10-year Treasury yield fell to 4.44% from 4.47% the day before, reflecting eased concerns about inflation. Shorter-term yields fell more sharply, signaling growing optimism that the Federal Reserve could cut interest rates this year.
Investors now widely expect at least two rate cuts by year-end. The Fed has so far held rates steady in 2025, cautious about potential inflation acceleration tied to Trump’s trade measures. However, with inflation data trending below expectations, central bank officials may reconsider their stance.
Brian Jacobsen, chief economist at Annex Wealth Management, suggested that “the Fed could be justified in doing some preemptive rate cuts. They were afraid inflation would rise before growth slowed — now the script has flipped.”
Elsewhere, hopes for a broader U.S.-China trade resolution remained a key market driver. Trade talks concluded in London with Trump announcing a preliminary agreement that would see China supply rare-earth magnets and minerals to the U.S. In exchange, Chinese students would be allowed to study in American universities. Trump described the deal as a “great WIN for both countries.”
Investors, however, are still looking for a comprehensive deal that could ease ongoing economic tensions between the world’s two largest economies. Such a breakthrough could further boost markets, which have largely recovered from a steep 20% drop earlier this year.
On the corporate side, Tesla shares climbed 1.4% as CEO Elon Musk dialed back controversial remarks about Trump, helping allay fears about the company’s future government contracts. Last week, Musk’s public spat with Trump triggered volatility in Tesla’s stock. His new tone seems to be restoring investor confidence.
Chewy, the online pet supplies retailer, fell 11.8% after missing profit estimates for the quarter, despite strong year-to-date gains of nearly 37%. The report disappointed investors hoping for sustained momentum.
Global markets also posted modest gains. European and Asian indices closed higher, with South Korea’s Kospi surging 1.2%, making it one of the day’s strongest performers.
Despite political uncertainty and geopolitical risks, the U.S. stock market remains resilient, fueled by easing inflation, solid corporate earnings in some sectors, and cautious optimism around monetary policy.
With the S&P 500 just 1.6% off its all-time high, investors appear cautiously confident that the economic environment, for now, is stable enough to sustain gains — assuming inflation doesn’t return in force and trade tensions continue to de-escalate.
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