Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed Tuesday’s session in negative territory following the conclusion of U.S.-China trade talks in Stockholm, Sweden.
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After the meeting, Chinese chief trade negotiator Li Chenggang said that the two sides had agreed to another tariff pause extension. However, Treasury Secretary Scott Bessent later clarified that President Trump would ultimately decide on that call. He added that the meeting excluded discussions of a potential meeting between Trump and Chinese President Xi and the topic of TikTok.
At the same time, both Bessent and White House economic advisor Kevin Hassett characterized the meeting as positive. On Wednesday, Bessent and U.S. Trade Representative Jamieson Greer will brief Trump on the details. Trump will likely make a tariff extension decision afterwards.
The Fed will announce its interest rate decision tomorrow, although it’s highly likely that policymakers will hold rates steady in a range between 4.25% and 4.50%. The odds of a 25-bps rate cut sit at a minuscule 2.1%, according to the CME FedWatch tool. Investors will have to wait until the September 16-17 meeting for a potential rate cut, with the odds of a 25-bps reduction at a favorable 64.8%.
Trump announced a 10-day deadline for Russia to end its war on Ukraine, threatening 100% secondary tariffs. Crude oil futures spiked following his comments and are up by about 4% at the time of writing. Russia is a top global exporter of both oil and gas with key customers like China and India.
Despite Trump’s signature tariffs, consumer confidence is steadily recovering. July’s Consumer Confidence Index (CCI) increased by 2.0 points to 97.2, above the estimate for 96.0. June’s CCI was revised higher to 95.2 from 93.0. Additionally, the average 12-month inflation outlook shrank to 5.8% from 5.9%.
Along with rising consumer confidence, the IMF upgraded its 2025 U.S. GDP growth estimate to 1.9% from 1.8% in April. The organization also lifted its global GDP growth estimate to 3.0% from 2.8%, citing lower tariffs, improving financial conditions, and fiscal expansion.
The S&P 500 (SPX) closed with a 0.30% loss while the Nasdaq 100 (NDX) fell by 0.21%.
