Wall Street Eyes Record Highs As Trump Seals China Deal, Soft Inflation Eases Tariff Jitters

A mix of bullish catalysts is poised to lift investor sentiment Wednesday, as President Donald Trump confirmed a China trade deal and fresh inflation data came in softer than expected for May.

Trump declared a sweeping new trade agreement with China via Truth Social following two days of negotiations in London, suggesting major concessions from Beijing and lighter U.S. obligations.

“Full magnets, and any necessary rare earths, will be supplied, up front, by China,” Trump said, adding that the U.S. would reciprocate by allowing Chinese students access to U.S. colleges.

The deal, pending final approval with Chinese President Xi Jinping, includes a significant tariff shift. The U.S. will continue applying tariffs totaling 55% on selected Chinese imports, while China will impose a 10% tariff rate on U.S. goods.

Inflation Rises Less Than Expected In May, Easing Tariff Anxiety

U.S. consumer inflation was softer than expected in May, reinforcing expectations for Federal Reserve rate cuts later this year.

The Consumer Price Index rose 2.4% from a year earlier, undercutting the 2.5% forecasted by economists and edging slightly above April's 2.3% reading. On a monthly basis, prices climbed just 0.1%, slower than both the prior month's 0.2% and the consensus estimate.

Core CPI—which excludes food and energy—held steady at 2.8% year over year, missing the 2.9% projection. Month over month, core prices advanced only 0.1%, undershooting the expected 0.3%.

Energy prices were a major drag, falling 1% in May. Gasoline plunged 2.6%, reversing the prior month's rise. On the flip side, services like medical care and motor vehicle insurance saw upward pressure.

“With lower-than-expected numbers across the board and a trade deal with China that was agreed to in London, the narrative around tariff-induced inflation should subside,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.

How Close Are We to New Highs?

In premarket trading, the S&P 500 index traded at 6,050, up 0.20%, while the Nasdaq 100 added 0.25% to reach 21,990.

The Dow Jones Industrial Average gained 0.1% to 42,924.

Both the S&P 500 and Nasdaq 100 are now less than 2 percentage points from their all-time highs, at 1.6% and 1.1% away, respectively.

According to Benzinga Pro platform, top-gainers within large-cap stocks following the release of the inflation included:

• CoreWeave Inc. (NASDAQ:CRWE) gained 3.57% to $159.70
• NICE Ltd. (NASDAQ:NICE) rose 3.33% to $179.00
• Best Buy Co. Inc. (NYSE:BBY) added 3.14% to $76.00
• Textron Inc. (NYSE:TXT) climbed 3.03% to $78.15
• Honda Motor Co. Ltd. (NYSE:HMC) increased 2.97% to $29.36
• Amer Sports Inc. (NYSE:AS) rose 2.86% to $38.69
• IDEXX Laboratories Inc. (NASDAQ:IDXX) gained 2.85% to $540.00
• Chewy Inc. (NYSE:CHWY) advanced 2.74% to $43.40
• Skyworks Solutions Inc. (NASDAQ:SWKS) jumped 2.67% to $75.98
• Teradyne Inc. (NASDAQ:TER) added 2.59% to $90.47

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