Markets Rally Amid Lower Inflation Expectations and Trade Talk Progress

The S&P 500 and Nasdaq were poised to approach record highs on Wednesday, buoyed by a milder inflation report that alleviated fears of tariff-driven price hikes and increased the likelihood of interest rate reductions.

The Consumer Price Index rose by only 0.1% in May, less than the anticipated 0.2%, instilling confidence in traders who are now pricing a 70% chance of a Fed rate cut by September. Despite Trump's tariffs posing long-term inflation concerns, the report suggested more immediate relief and potential monetary policy easing.

Market optimism was further supported by renewed trade negotiations between the U.S. and China, with a framework agreement on track to address ongoing trade tensions. Investors are closely observing the talks for any disruptions in the global market, while the S&P 500 and Nasdaq continue their upward trajectory, recovering from recent downturns.

(With inputs from agencies.)