Markets Steady as Trade Talks Progress

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💰Markets Steady as Trade Talks Progress

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Markets held their ground this week as U.S.-China negotiations in London showed signs of de-escalation. While inflation data and Fed expectations remain in focus, improving trade sentiment helped support equities across key sectors. Tech stocks, chipmakers, and crypto all saw gains, even as names like Tesla faced renewed pressure.

Let’s go.

BIG IDEA 1💡
Market Finds Balance, Trade Tensions Ease, Fed Holds

Market Gains Broad but Measured

• Indices Edge Higher – The S&P 500 rose 0.3% Tuesday, while the Nasdaq and Dow posted modest gains, continuing May’s momentum.

• Confidence Improves – Positive trade headlines and a resilient labor market supported investor sentiment across sectors.

• Economic Warning – Analysts warn that without structural reforms or a full trade resolution, gains may remain limited.

U.S.- China Talks Spark Hope

• Talks Extend in London – Commerce Secretary Lutnick described negotiations with Chinese officials as “going well,” hinting at possible easing of chip export curbs and rare earth restrictions.

• Rare Earth Relief? – China issued temporary permits for critical mineral exports, helping to cool immediate concerns in auto and defense sectors.

• Cautious Optimism – Wolfe Research and Capital Economics see the talks as progress but not a game-changer unless followed by formal agreements.

Inflation Watch as Fed Holds Course

• CPI Data Incoming – The May consumer price index is expected to rise slightly to 2.5%, with core inflation ticking up to 2.9%.

• Rate Cuts Still Forecast – Citi and Deutsche Bank expect the Fed to start cutting rates in September, projecting 125 basis points in total easing through early 2026.

• Tariff Uncertainty Weighs – The inflation outlook remains clouded by the lingering effects of Trump's tariff agenda, prompting the Fed to stay cautious.

BIG IDEA 2💡
Policy Risks Return: Trade, Spending, and Crypto Uncertainty

Crypto Regains Momentum

• Bitcoin Rises Again – BTC climbed 1.9% to over $108K, with risk appetite improving amid trade optimism.

• Altcoins Surge – Ethereum jumped 8.3%, while Dogecoin, Solana, and Polygon also saw strong gains.

• Security Concerns Return – Paraguay’s president’s X account was hacked in a fake Bitcoin tender announcement, reminding investors of ongoing cybersecurity risks.

Some investors are looking beyond Bitcoin and exploring alternative digital assets.

Tesla Faces Delivery Challenges

• Global Sales Slump – Tesla’s Q2 deliveries are down 21% year-over-year, with Europe seeing a 42% drop.

• Brand Perception at Risk – Analysts flagged weak EV demand and political distractions, similar to McDonald’s recent downgrade over shifting consumer trends.

• Mixed Analyst Sentiment – Wells Fargo is cautious, but Morgan Stanley remains bullish on Tesla’s AI and robotics potential.

TSMC Shines on AI Demand

• Strong May Sales – TSMC reported a 40% revenue jump year-over-year on strong AI chip demand.

• Wall Street Keeps Spending – Big tech continues investing in AI, while Apple’s modest WWDC updates underwhelmed investors.

• Tariff Easing Could Help – Ongoing trade talks may loosen chip export restrictions and support further growth.

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INFLATION REPORT💸
Today’s Inflation Rate: 2.32% 🤔