Wednesday was a bloodbath for the 3 biggest U.S. stock indices. Deal investors are reportedly still seeking further details on the nascent trade framework between the United States and China. The S&P 500 futures were down 0.07%, and Nasdaq 100 futures were down 0.04%. The S&P 500 index of big U.S. stocks shot up nearly 0.6% Tuesday during regular trading. This increase represents its third day of gains in a row!
The Dow futures fell 24 points, or 0.06% for a small drop. Even in this downturn, there is encouraging news to be found! The U.S. and China achieved a significant trade agreement after two days of intense negotiations that produced an apparent goodwill. Earlier this year, in May, Japan and the United States reached an interim trade deal to suspend high tariffs on each other’s imports. They still haven’t reached a full deal.
In the larger market backdrop, the S&P 500 is less than 2% from its February high. That’s a sign that investor confidence is still booming, despite recent eyebrows-raising volatility. On Tuesday, the tech-heavy Nasdaq Composite gained 0.6%, while the blue-chip Dow jumped 0.3%.
GameStop, the meme stock par excellence for retail investors, just posted $732.4 million in revenue last quarter. That was well below the $750 million estimate from analysts at FactSet. At the same time, GitLab’s stock fell off a cliff, crashing 13%. This decline came on the heels of the company’s second-quarter guidance, which missed consensus estimates. In contrast, Dave & Buster’s (PLAY) stock jumped over 9% after reiterating its full-year guidance.
David Folkerts-Landau commented on the current trade situation, stating, “One key concern is that the Trump administration, buoyed by the market rebound, may resume aggressive tariff rhetoric—potentially triggering renewed retaliation from China and Europe, as seen earlier this year.”
The market’s near-term outlook is further complicated by dramatic increases in long-end bond yields, which are raising fiscal alarms worldwide. Folkerts-Landau emphasized this point by saying, “At the same time, rising long-end bond yields are amplifying fiscal concerns globally, particularly given plans for expanded deficits across multiple major economies.”
As investors await to digest all of these developments, all eyes are focused on next Tuesday’s inflation report. Sam Millette noted that “ultimately this report is not expected to cause any significant changes to the Fed’s current wait and see approach when it comes to setting rates.” There is a prudently optimistic streak running through market participants. They artfully juggle a minefield of domestic economic indicators with the minefield of international trade relations.