Stock Futures Slip as Markets Await U.S.-China Trade Clarity and Key Inflation Data

U.S. stock futures slipped early Wednesday as market participants awaited more clarity on a tentative trade policy consensus between the U.S. and China. The dip reflects growing investor caution amid global economic crosscurrents. Futures tied to the S&P 500 fell 0.34%, the Nasdaq 100 lost 0.38%, and Dow Jones futures dropped 108 points or 0.25%.

The unease also stems from anticipation around the release of the May consumer inflation report, a key metric that could shape the Federal Reserve’s monetary policy stance.

U.S.-China Trade Talks Show Progress, But Market Remains Cautious Amid Uncertainty

Officials from the U.S. and China reached a preliminary trade understanding after two days of discussions in London. U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer are expected to return to Washington to seek President Trump’s approval of the framework.

Although both countries had earlier agreed to suspend high tariffs, the markets remain on edge due to the lack of a finalized agreement. Treasury Secretary Scott Bessent also left the talks to testify before Congress, signaling the sensitivity and urgency surrounding the negotiations.

Despite Wednesday’s dip in futures, major indexes posted gains in the previous session. The S&P 500 rose 0.6% on Tuesday, notching its third consecutive positive day and staying within 2% of its February peak. The Nasdaq Composite also gained 0.6%, and the Dow climbed 0.3%. However, underlying concerns persist about how prolonged trade tensions and fiscal pressures may dampen the market’s upward momentum.

Tariff Threats, Bond Yields, and Inflation Data Stir Investor Anxiety Worldwide

Deutsche Bank analysts caution that recent stock market strength might embolden the Trump administration to revive aggressive tariff rhetoric. Such a move could provoke retaliatory measures from China and Europe, mirroring earlier conflicts in the year. Additionally, rising long-term bond yields are heightening global fiscal worries, especially as many major economies plan to increase deficit spending. According to Deutsche Bank’s David Folkerts-Landau, the convergence of these pressures may hasten an impending financial reckoning in 2025.

Investors are also bracing for the May consumer price index (CPI) release, which is expected to show a 0.2% month-over-month increase and a 2.4% rise year-over-year. While the report is not likely to alter the Federal Reserve’s current wait-and-see stance, any unexpected spike could unsettle markets already sensitive to inflation signals. Meanwhile, earnings from companies like Chewy and Oracle are expected later in the day, adding another layer of data for traders to digest as they gauge market direction.