S&P 500 Gains as Lutnick Signals US-China Progress

This content was published on June 10, 2025 - 22:46

7 minutes

(Bloomberg) — Wall Street investors closely monitoring trade discussions between the US and China drove stocks higher as Commerce Secretary Howard Lutnick said negotiations went really, really well. Treasuries and the dollar saw small moves ahead of a key inflation report.

The S&P 500 finished less than 2% away from its record. Tesla Inc. led gains in megacaps. JM Smucker Co. sank the most in nearly four decades after saying tariffs increasing costs in its coffee business will hurt profit. Bonds barely budged after a $58 billion sale of three-year notes. That’s the first in a trio of offerings that will culminate in Thursday’s sale of 30-year debt.

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Talks between the US and China extended later into their second day in London, with a Treasury official saying the teams were trying to iron out technical details. Asked if negotiations would conclude Tuesday, Lutnick said “if they need be, we’ll be here tomorrow, but I hope they end this evening.”

“Any materially positive or negative trade-talk headlines out of London, where US and Chinese negotiations remain underway, could meaningfully move markets,” said Tom Essaye at The Sevens Report.

Data Wednesday is expected to show US consumers probably saw slightly faster inflation in May, notably for merchandise, as companies gradually pass along higher import duties. Prices of goods and services, excluding volatile food and energy costs, rose 0.3% in May, the most in four months.

The so-called core consumer price index, which is regarded as a better indicator of underlying inflation, is seen accelerating for the first time this year — to 2.9% — on an annual basis, based on the median projection.

A survey conducted by 22V Research showed 42% of investors believe that the market reaction to CPI data will be “risk-on”, 33% said “mixed” and 25% “risk-off”.

This is the first time the reaction has favored risk-on since August 2024, 22V said.

“The combination of the May inflation figures and upcoming Treasury supply will provide investors tradable events and add to the market’s collective understanding of the early fallout from the trade war as well as demand for US debt in the current environment,” said Ian Lyngen at BMO Capital Markets.

Read: US Rate Markets May Remain in Range as Economy Slow and Steady

Yields on long-term global debt have soared in recent weeks as concern over spiraling debt and deficits led some investors to shun the securities and prompted others to demand a higher premium for the risk of lending to governments.

Investors betting that yields on long-dated Treasuries will keep rising faster than those on shorter notes risk getting burned, according to BNP Paribas SA’s Guneet Dhingra.

He said 30-year bonds already price in the worsening fiscal picture and could rebound if there’s strong demand for an auction or deficit fears ease.

As for US stocks, the rally is about as good as it’s going to get this year given tariff-related uncertainty, according to Anthi Tsouvali at UBS Global Wealth Management. Her team expects the S&P 500 to end the year around 6,000. The gauge closed at 6,038.81 Tuesday.

Meantime, analysts at firms including Barclays Plc and JPMorgan Chase & Co. see further upside for US stocks, in part because they expect institutional investors to abandon their cautious stance and ramp up exposure to equities.

While stocks have roared back from their tariff-fueled April slide, big money managers remain remarkably underweight: Their overall equity positioning has been lower only 23% of the time since 2010, according to Deutsche Bank AG.

Bank of America Corp. clients were net sellers of US equities last week, with outflows led by institutional investors as hedge funds and retails purchased shares, strategists led by Jill Carey Hall said Tuesday in a note to clients.

“Our S&P 500 Index valuation work suggests a historical premium for domestically-oriented vs. foreign-exposed stocks, indicating that tariffs/de-globalization are generally priced in (but the tax bill not so much),” Carey Hall wrote.

Corporate Highlights:

Tesla Inc. executives including Elon Musk promoted a video of one of its vehicles driving in Austin with nobody behind the wheel, hinting that it’s close to launching its robotaxi service in the Texas capital.
Mark Zuckerberg, frustrated with Meta Platforms Inc.’s shortfalls in AI, is assembling a team of experts to achieve artificial general intelligence, recruiting from a brain trust of AI researchers and engineers who’ve met with him in recent weeks at his homes in Lake Tahoe and Palo Alto.
Wells Fargo & Co.’s Federal Reserve-imposed asset cap that restricted its size for more than seven years was “grossly unfair,” said Jamie Dimon, longtime boss of its biggest rival.
Boeing Co. scored the highest monthly order intake in more than a year, including a huge haul during President Trump’s trip to the Middle East, giving the US planemaker a commercial boost as it heads into the crucial Paris Air Show next week.
Redburn Atlantic slapped McDonald’s Corp. with its sole sell rating, saying shifting consumer patterns due to weight-loss drugs and inflation are cause for concern.
Eli Lilly & Co. will only work with telehealth firms that agree to stop selling copycat versions of weight-loss drugs, diminishing the likelihood of a partnership with one most visible players in the industry, Hims & Hers Health Inc.
Citigroup Inc. is set to put aside hundreds of millions of dollars more than it did last quarter to account for potential losses on loans and credit cards it issues to its clients, a sign of likely worsening consumer health that runs counter to analysts’ expectations.
Bondholders to EchoStar Corp. are working with law firm Akin Gump Strauss Hauer & Feld as the telecommunications company mulls a potential bankruptcy filing amid a Federal Communications Commission probe, according to people familiar with the matter.

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