S&P 500 Rally Slows to a Halt Near Record as Big Tech Swoons – US Market Wrap

A slump in major tech weighed down markets, following a rise that had the S&P 500 within striking distance of its all-time highs. Earlier gains were spurred by surprisingly mild inflation statistics, which increased bets on Federal Reserve rate reduction, causing bond rates to fall.

Equities reversed a three-day rally, with Apple leading losses in megacaps and Tesla barely changed after rising nearly 3%. Treasuries also rose following a strong $39 bln offering of 10-Yr debt. Shorter maturities drove the gain, with two-year rates falling below 4%. Money markets forecast two Fed rate cuts by the end of 2025, with traders increasing their bets on a September decrease to over 75%. The dollar fell to its lowest level since 2023.

Core inflation in the US climbed less than expected in May, indicating that businesses are mostly avoiding passing on higher tariff costs to customers. Trump announced that a trade framework with China had been reached, with Beijing giving rare earths and magnets “UP FRONT” and the United States enabling Chinese students to attend its schools and universities.

Despite Wednesday’s losses, the S&P 500 has rallied dramatically since April, when it was on the verge of a bear market. Much of the bounce, which surpassed 20%, was based on expectations that Trump would decrease tariffs after making agreements with governments across the world.