U.S. Stock Futures Fall as Ongoing U.S.–China Trade Talks Worry Investors

U.S. stock index futures saw a slight dip on Tuesday as investors closely watched the ongoing trade negotiations between the U.S. and China in London.

Around 5:20 AM ET (9:20 GMT), Dow Jones Futures fell 75 points (0.2%), S&P 500 Futures slipped 7 points (0.1%), and Nasdaq 100 Futures dropped 28 points (0.1%). These moves followed a subdued day on Wall Street as the trade talks, now in their second day, continued between the world’s two largest economies. The S&P 500 managed a small gain in the previous session, marking its second consecutive winning day, driven by strong performances from tech giants Amazon (AMZN) and Google-parent Alphabet (GOOGL).

U.S.-China Trade Talks Continue Amid Hopes for De-escalation

The talks, which began Monday, aim to ease the ongoing tariff dispute between the world’s two largest economies. Optimism had been building after the two sides agreed in May to temporarily reduce tariffs.

This round of discussions is focused on two key areas:

• China’s restrictions on rare earth mineral exports, which could significantly impact global supply chains.
• U.S. limits on chip exports to China, which have been a point of contention for Beijing.

According to The Wall Street Journal, President Trump authorized negotiators to ease some restrictions on chip and tech exports to facilitate progress. Other reports suggest Trump is actively considering lifting these restrictions to improve relations, while Beijing’s rare earth export curbs remain a central sticking point.

Trump said Monday the talks were progressing well and that he was receiving “only good reports.” However, optimism has started to fade. Speculation suggests Chinese officials are not satisfied, and given the strained history between the two countries, even small setbacks are making markets uneasy.

Inflation Data and Fed Policy in Focus

With a light economic calendar for Tuesday, investor attention has shifted to Wednesday’s Consumer Price Index (CPI) report. This inflation data is expected to show modest increases, partly driven by rising import prices linked to tariffs, and could influence Federal Reserve policy in the coming months.

Citi strategists expect the Fed to keep interest rates unchanged at 4.25% to 4.5% through June and July, with rate cuts beginning in September. The brokerage forecasts 25-basis-point cuts at each meeting through March of next year, totaling 125 basis points in reductions. Citi analysts noted, “The Fed is on hold, but cuts are still coming.”

Apple Disappoints at Annual Conference

In corporate news, Apple (AAPL) launched its annual Worldwide Developers Conference, announcing various updates to its artificial intelligence (AI) features. Despite the announcements, Apple’s stock declined on Monday as investors were underwhelmed by the lack of significant breakthroughs.

Although Apple introduced features like live translations for phone calls, the company largely withheld bigger AI-related advancements, leaving investors disappointed amid rising competition in the AI space.

On the earnings front, JM Smucker Company (SJM) and GameStop (GME) are scheduled to report quarterly results on Tuesday.

Crude Oil Edges Higher Amid Trade Talk Watch

Oil prices rose slightly on Tuesday as markets closely followed developments in the U.S.–China talks. A positive resolution could ease trade tensions and bolster global fuel demand.

As of 5:20 AM ET, Brent crude futures were up 0.2% to $67.19 per barrel, after hitting their highest level since April 28 on Monday. U.S. West Texas Intermediate (WTI) crude also gained 0.2% to $65.43 per barrel.

The potential for a trade agreement has helped alleviate demand concerns, with expectations that a deal could stimulate global economic activity and drive crude consumption higher.