Trade Tensions and Inflation: Impact on U.S. Stocks
The S&P 500 dropped amid Middle East tensions and a subdued inflation report that eased tariff fears. Investors reacted to potential evacuations at the U.S. Iraqi embassy and the risk of conflict with Iran. Meanwhile, mixed corporate performances and ongoing trade talks with China also influenced market sentiment.
The S&P 500 closed lower on Wednesday as geopolitical tensions in the Middle East unnerved investors. Despite a tame inflation report that quelled some concerns over tariff-induced price spikes, the news of possible U.S. embassy evacuations in Iraq due to escalating security threats hit Wall Street hard.
Major tech stocks like Amazon and Nvidia, which had previously gained ground, fell, applying additional pressure on the S&P 500. Consumer price data showed only a slight increase for May, but economists predict inflation will rise further due to import tariffs enforced by the Trump administration.
In trade developments, officials confirmed a U.S.-China tariff truce framework, leading to some optimism. However, market indices such as the S&P 500 remained volatile, with preliminary data showing a significant drop. Investors continue to anticipate potential Federal Reserve rate cuts as part of economic strategy.
(With inputs from agencies.)
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