S&P 500 declines amid Middle East tensions, awaits further details on US-China trade deal

The S&P 500 closed lower due to concerns over Middle East tensions and awaited details on the US-China trade agreement. Amazon and Nvidia fell after recent gains. The consumer price index rose marginally in May, but inflation is expected to accelerate due to Trump's import tariffs. There is a 70% chance of the Fed cutting interest rates in September.

The S&P 500 closed lower on Tuesday, June 12, 2025, amidst concerns over Middle East tensions and as investors awaited further details on the US-China trade agreement. Amazon and Nvidia fell after recent gains, while the consumer price index (CPI) rose marginally in May. Inflation is expected to accelerate due to Trump's import tariffs, and there is a 70% chance of the Federal Reserve (Fed) cutting interest rates in September.

Trade talks between the US and China resumed on Tuesday in London, following six hours of discussions on Monday. Commerce Secretary Howard Lutnick stated that the talks were progressing but could stretch into Wednesday. US officials were upbeat but vague on progress, with Treasury Secretary Scott Bessent calling the meeting "good" and Commerce Secretary Howard Lutnick describing the negotiations as "fruitful" [1].

President Trump indicated that the deal should resolve issues between the two countries on rare earths and magnets. However, he did not mention loosening US export controls, particularly on the design and manufacture of semiconductors. The US and China agreed to a framework and implementation plan to ease tariff and trade tensions [2][3]. Trump's most sweeping tariffs continue to face legal uncertainty, but a federal appeals court held a decision allowing the tariffs to temporarily stay in effect [2][3].

The US-China trade talks come as Trump pushes countries to speed up negotiations. The US sent a letter to partners as a "friendly reminder" that Trump's self-imposed 90-day pause on sweeping "reciprocal" tariffs is set to expire in early July. White House advisers have for weeks promised trade deals in the "not-too-distant future," with the only announced agreement so far coming with the United Kingdom. US and Indian officials held trade talks this week and agreed to extend those discussions on Monday and Tuesday ahead of the July 9 deadline [1][2][3][4].

New tariffs are coming into play: Effective Wednesday, June 4, Trump doubled tariffs on steel and aluminum from 25% to 50%. Meanwhile, the consumer price index (CPI) rose marginally in May, but inflation is expected to accelerate due to Trump's import tariffs. The Fed is expected to cut interest rates in September, with a 70% chance of this happening [1][2][3][4].

References:
[1] https://uk.finance.yahoo.com/news/trump-tariffs-live-updates-us-china-trade-talks-resume-on-tuesday-after-signs-of-progress-200619090.html
[2] https://finance.yahoo.com/news/live/trump-tariffs-live-updates-us-china-trade-framework-set-as-trump-signals-approval-200619703.html
[3] https://finance.yahoo.com/news/live/trump-tariffs-live-updates-us-china-trade-framework-set-as-trump-says-deal-done-200619040.html
[4] https://finance.yahoo.com/news/live/trump-tariffs-live-updates-us-china-trade-talks-could-stretch-into-wednesday-lutnick-says-200619882.html