Good morning. U.S. equities finished modestly higher Tuesday, buoyed by optimism around U.S.–China trade negotiations and ahead of a key inflation report due this morning. Comments from Commerce Secretary Lutnick suggesting trade talks in London are “going well” kept bullish sentiment intact, even as investors weighed the risk of tariff-driven inflation reaccelerating this summer. The S&P 500 posted its eighth consecutive intraday high, while market breadth was strong and risk appetite remained intact.

Investors are closely watching May’s Consumer Price Index (CPI) data, expected to show continued moderation in inflation. While tariffs have yet to meaningfully push up prices, analysts warn that effects may surface in coming months, especially in goods-heavy categories. On the geopolitical front, Trump’s hawkish tone on Iran caused a brief dip midday, but markets quickly rebounded. Energy and consumer discretionary led the day’s gains, while Treasuries held steady amid a successful 3-year note auction.

U.S. and China Push to Finalize Trade Framework
The WSJ reports that U.S. and Chinese trade negotiators made progress in London, agreeing on a framework to revive the Geneva trade pact. The deal may involve the U.S. easing semiconductor export restrictions in exchange for access to rare earth minerals.
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Court Keeps Trump’s Tariffs in Place—for Now
A U.S. appeals court declined to block Trump’s sweeping April tariff package, allowing the levies to remain while legal challenges proceed. MarketWatch notes that the 90-day pause window on the tariffs expires July 9.
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Tracking Tariff Impact in Real Time
MarketWatch highlights efforts by researchers to monitor retail pricing effects from recent tariffs. Thus far, retailers appear to be absorbing some of the cost pressure, but analysts warn that price hikes may hit shelves in Q3.
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CPI in Wall Street’s Crosshairs
Inflation remains front and center as economists forecast a 0.3% core CPI increase for May. MarketWatch warns that the recent wave of tariffs may begin to show up in consumer prices by summer’s end.
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World Bank Cuts Global Growth Forecast
Bloomberg reports that the World Bank slashed its 2025 global growth outlook to 2.3%, citing tariff escalation and geopolitical instability. The group now expects global trade to grow just 1.8% this year—less than half its 2024 pace.
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Nvidia CEO: Quantum Is Nearing “Inflection Point”
At a tech summit in Seoul, Nvidia CEO Jensen Huang said quantum computing is nearing commercial viability and predicted massive future overlap between quantum chips and traditional AI accelerators.
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U.S. stock markets ended Tuesday slightly higher, as investors monitored encouraging signs from the second day of U.S.–China trade talks in London. All but one S&P 500 sector advanced, with energy, communication services, and healthcare leading gains. Industrials lagged. S&P futures touched a fresh intraday high—marking the eighth in as many sessions—as comments from Commerce Secretary Lutnick and NEC Director Kevin Hassett hinted at progress toward a tech-rare-earths trade swap.

The NFIB Small Business Index rose for the first time in five months, reflecting growing confidence as tariff pressures ease. Meanwhile, global markets were mixed. European equities reacted positively to stronger eurozone sentiment data, while Asian bourses traded sideways overnight. Treasury yields ticked slightly lower despite strong equity gains, with the 10-year yield closing near 4.47% and the 2-year holding around 4%. Market focus now shifts squarely to today’s CPI release, with expectations for a monthly core CPI increase of 0.3%.

With the CPI print on deck and trade talks showing signs of real momentum, markets remain buoyant—though sensitive to headline risk. Tariff-driven inflation remains a wildcard, but a positive resolution to the U.S.–China trade framework could be a powerful tailwind. We continue to watch inflation trends, global growth revisions, and central bank guidance as Q2 progresses.