Associated Press Business Writer Stanchion
NEW YORK (AP) — U.S. stocks are drifting Wednesday after reports suggested that President Donald Trump’s tariffs have at least not yet increased.
The S&P 500 hasn’t changed virtually in early trading, just 1.7% below the February’s all-time high set. Dow Jones’ industrial average fell 46 points (0.1%) as of 9:35am, with Nasdaq’s composites 0.2% higher.
In the bond market, this measure has become a little stronger. There, the Treasury yields were eased after the report showed that inflation was inscribed by fewer months than economists had expected. US consumers had to pay a 2.4% higher price overall in May compared to the previous year. It rose from the 2.3% inflation rate in April, but not as bad as the 2.5% Wall Street had been expecting.
Trump’s wide tariffs appeared to have almost returned to the Federal Reserve 2% target from over 9% at its peak in the three summers, fears that Trump’s wide tariffs could ignite another acceleration of inflation.
Economists have warned that it may take several more months to feel the full impact of Trump’s tariffs, but that hasn’t happened. For the time being, many companies may be attracting products they already have in stock rather than passing higher costs from fresh imports.
Financial markets also had only a small response to the conclusion of a two-day trade talk between the US and China in London.
Trump said Wednesday that China will supply rare earth minerals and magnets to the United States, allowing Chinese students to students to US universities, and that they still need an agreement by Chinese leaders. Trump also said, “President Xi China and I will work closely together to open up China to American trade. This will be a huge victory for both countries!!”
Investors wanted a more drastic deal than lowering tariffs enough to help the economy avoid a recession. Hope for such a deal between the US and China, along with other countries, is one of the main reasons why the S&P 500 went back almost to an all-time high after it fell by less than about 20% a few months ago.
On Wall Street, crunch fell 12% after pet supplies sellers reported lower profits in the recent quarter than analysts expected.
Tesla helped support the market after a 2% rise. After Elon Musk’s relationship with Trump collapsed, many of the major losses from last week have recovered, which has sparked fears about the loss of the electric vehicle company’s business. Musk on Wednesday retreated from some of his previous comments, saying they were “too far.”
In the bond market, the 10-year Treasury yield fell from 4.47% to 4.43% late Tuesday. Short-term yields have further reduced expectations of what the Fed will do with overnight interest rates.
Wednesday’s reading exceeded expectations regarding inflation raised expectations along Wall Street that the Fed could cut key interest rates at least twice before the end of the year.
The Fed has stabilized interest rates so far this year, and has suspended it after cutting at the end of last year. We were waiting to see how much Trump’s tariffs would increase.
In overseas stock markets, indexes rose modestly in Europe and most of Asia. Korean Cospi was one of the best performers, jumping 1.2%.
AP Business Writer Yuri Kageyama contributed.
Original issue: June 11, 2025 7:25am EDT
