Wall Street’s main indexes dropped on Wednesday on worries of a prolonged U.S.-China trade war after Washington hardened its stance, but losses were cushioned by a muted reading on inflation that backed the case for an interest rate cut.
Data showed consumer prices edged up 0.1% in May, in line with expectations of economists polled by Reuters and pointed to moderate inflation. Excluding the volatile food and energy components, the CPI nudged up 0.1%.
“These numbers will add some fuel to the case made by the markets and many analysts that the Fed should cut rates,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
Fresh worries erupted on the trade front after President Donald Trump said he was holding up a deal with China and had no interest in moving ahead unless Beijing agrees to four or five major points.
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