US stocks paused on a recent rally Wednesday as investors digested a softer-than-expected inflation reading and assessed a US-China plan to salvage their trade truce.
The Dow Jones Industrial Average ( ^DJI ) was flat on the day, while the S&P 500 ( ^GSPC ) slipped just under 0.3%. The tech-heavy Nasdaq Composite ( ^IXIC ) led the declines, falling roughly 0.5%.
Recently, the S&P 500 and Nasdaq have risen to within striking distance of record closing highs amid optimism for potential trade deals.
Before the open, markets gave a muted response to a US-China framework agreement to get the Geneva tariff truce back on track. Trump and other US officials indicated the deal should resolve issues between the two countries on rare earths and magnets. Trump said Wednesday that the US will allow Chinese students in US colleges, a sticking point that had emerged in the weeks following the countries' mid-May deal in Geneva. However, the deal was seen as lacking detail about export curbs and tariff levels.
Read more: The latest on Trump's tariffs
Stocks revived somewhat after a better-than-expected reading of the May Consumer Price Index (CPI) before the bell. Consumer inflation was up 0.1% month over month, Bureau of Labor Statistics data showed, compared with the 0.2% rise expected and the 0.2% increase in April.
On a "core" basis, which excludes volatile food and energy costs, May CPI rose 2.8% year over year, matching April's rate. Monthly core prices increased 0.1%, versus a 0.2% gain the prior month.
The data was in focus ahead of the Federal Reserve's next monetary policy decision on June 18. Odds of a September interest rate cut increased following the release, with markets pricing in a 57.2% chance versus 53.5% a day before, per the CME FedWatch tool. Treasury yields also fell, with the benchmark 10-year yield ( ^TNX ) declining to 4.41%.
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