Wall Street Futures Slip as CPI Looms After Trade-Fueled Rally

Investors shift focus to inflation, Fed outlook after U.S.-China tariff truce boost

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📉 Futures Pull Back After Monday Surge

U.S. stock futures were lower early Tuesday as markets cooled following Monday’s tariff truce rally. Investors are now squarely focused on April’s CPI report, set for release at 8:30 a.m. ET, which could reshape the interest rate outlook.

• Dow futures down 0.23%
• S&P 500 futures lower by 0.45%
• Nasdaq 100 futures dropped 0.54%

Monday’s gains had pushed the S&P 500 to its highest close since March 5, with all three major indexes now having recovered their losses since Trump’s April 2 tariff blitz.

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📊 Key CPI Data to Guide Rate Expectations

Markets are anticipating:

• +0.3% MoM CPI for April
• +2.4% YoY CPI (unchanged from March)

“Today’s inflation data is critical. A hotter-than-expected print could erase expectations for Fed cuts, possibly delaying them into 2025,” said Jochen Stanzl of CMC Markets.

Traders currently expect two 25-basis-point cuts by year-end, starting in September, according to LSEG data.

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🇺🇸🤝🇨🇳 Tariff Truce Still in Focus

Markets had rallied Monday after a joint U.S.-China statement revealed that:

• U.S. tariffs on Chinese goods will drop from 145% to 30%
• Chinese tariffs will be lowered from 125% to 10%
• The U.S. will reduce “de minimis” tariff thresholds for Chinese imports

This 90-day reprieve is intended to facilitate negotiations and calm global markets. It also prompted Goldman Sachs to become the first major bank to lower U.S. recession odds.

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🗣️ Fed Speakers and Retail Earnings in Spotlight

Fed Chair Jerome Powell will speak Thursday, alongside a slate of other officials throughout the week. Markets will parse their comments for clues on:

• How tariffs are influencing inflation
• Whether the Fed still sees room for cuts this year

On the earnings front:

• 90% of S&P 500 companies have now reported
• Walmart reports later this week, offering insight into retail spending and supply chains post-tariff changes

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🚀 Movers: Coinbase, Tesla, Nvidia

• Coinbase (COIN) surged 9.3% premarket after being approved to join the S&P 500 on May 19
• Tesla (TSLA) and Nvidia (NVDA) dipped ~1%, giving back some gains from Monday

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🏁 Conclusion: Inflation Will Now Steer the Ship

After a relief rally fueled by a trade breakthrough, investors are quickly pivoting toward monetary policy drivers. With the Fed’s next moves now tied to inflation, today’s CPI print could be decisive in determining whether rate cuts arrive this year.

Markets may have exhaled after the tariff pause—but it’s inflation that holds the steering wheel now.