Lawrence Delevingne and Lawrence White
3 min read
By Lawrence Delevingne and Lawrence White
(Reuters) -Wall Street stocks and the dollar fell on Wednesday, while U.S. Treasury yields eased, amid fresh tension in the Middle East, a lack of detail in a U.S.-China trade deal, and U.S. consumer prices showing only a mild increase.
The U.S. is preparing a partial evacuation of its embassy in Iraq and will allow military dependents to leave locations around the Middle East due to heightened security risks in the region, U.S. and Iraqi sources said on Wednesday. Oil prices rose more than 4% to their highest in more than two months, with Brent crude futures settled at $69.77 a barrel. [O/R]
Earlier in the day, U.S. President Donald Trump said a deal getting the fragile truce in the U.S.-China trade war back on track was done after negotiators from Washington and Beijing agreed on a framework covering tariff rates. The deal also removes Chinese export restrictions on rare earth minerals and allows Chinese students access to American universities.
The latest trade truce offered investors hope that the two superpowers can reach a lasting resolution and prevent further market disruption, but the absence of detailed terms leaves room for potential future tariff conflicts.
Separately, the Consumer Price Index (CPI) increased 0.1% in May amid cheaper gasoline after rising 0.2% in April, the U.S. Labor Department said on Wednesday, but inflation is expected to accelerate in the coming months on the back of the Trump administration's import tariffs.
For U.S. stocks, the Dow Jones Industrial Average finished a day of choppy trading little changed, while the S&P 500 fell 0.27%, and the Nasdaq Composite lost 0.5%.
Scott Wren, senior global market strategist at the Wells Fargo Investment Institute, said there were still plenty of risks in equities, such as additional trade negotiations, rising inflation and growth slowing noticeably. There are "still plenty of potential downside triggers out there," he wrote in an email.
Asian shares were slightly more positive, with MSCI's broadest index of Asia-Pacific shares outside Japan up about 0.7%, while the STOXX benchmark for major European shares closed 0.3% lower.
DOLLAR DOWN, TREASURY YIELDS EASE
The U.S. dollar slid against most major currencies, with the dollar index down about 0.3% to 98.6. The dollar weakened slightly against the Japanese yen to trade at 144.6, while the euro edged up 0.5% to $1.148.
Ten-year Treasury yields fell 5.8 basis points to 4.416% as the U.S. Treasury Department saw strong interest in a $39 billion sale of 10-year notes on Wednesday, indicating that demand for the debt remains strong despite concerns that foreign investors are moving away from the market.
