U.S. Stock Futures Retreat from Gains Amid Uncertainty Over CPI Report

U.S. stock index futures edged lower on Tuesday, easing after Monday’s sharp gains driven by news of a U.S.-China trade agreement, as investors turned their focus to upcoming inflation data.

As of 05:40 ET (09:40 GMT), Dow Jones Futures were down 62 points (0.2%), S&P 500 Futures fell 18 points (0.3%), and Nasdaq 100 Futures dropped 85 points (0.4%).

Wall Street had a strong start to the week, with major indices posting their biggest daily gains since April 9. Optimism was fueled by a breakthrough in trade talks between the world’s two largest economies, reducing fears of a severe economic slowdown.

Recession Fears Ease as Tariffs Rolled Back

Goldman Sachs lowered its estimate of a U.S. recession to 35%, down from 45%, following Washington’s decision to significantly reduce tariffs on Chinese imports to 30%, after previously raising them to a peak of 145%. In response, China announced it would cut its own tariffs from 125% to 10%. Both sides also agreed to suspend all additional tariffs for 90 days.

The U.S. will also lower duties on a range of lower-value Chinese imports, signaling further de-escalation in trade tensions.

CPI Inflation Data in Focus

Despite the positive developments on trade, investor sentiment has turned cautious ahead of the release of April’s Consumer Price Index (CPI) data, due later on Tuesday. Economists expect headline and core inflation to remain elevated, in part due to rising input costs linked to prior tariff hikes.

Forecasts suggest consumer prices rose 2.4% year-over-year, unchanged from March. On a monthly basis, the CPI is expected to increase 0.3%, rebounding from a 0.1% decline in the previous month. Core CPI, which excludes food and energy, is projected to rise 0.3% month-over-month and 2.8% annually.

While the trade agreement marks progress, tariffs still remain well above pre-April levels, potentially keeping inflation pressures elevated. This data could play a critical role in shaping the Federal Reserve’s outlook on interest rates. Although the Fed has signaled a pause in rate adjustments, markets still anticipate cuts later this year.

According to the CME FedWatch Tool, there’s a 36.3% chance of a rate cut by the end of July and a 52.1% probability for a cut by September.

Boeing Gets a Lift from China — Bloomberg

In corporate news, Boeing (NYSE: BA) shares may be in focus after Bloomberg reported that China has lifted a month-long ban on its aircraft deliveries. Government sources indicated that regulators are now allowing domestic airlines to resume receiving Boeing jets — a potential sign of further easing in trade tensions.

Earnings Highlights and Index Updates

Tencent Music Entertainment (TME) beat Q1 revenue estimates, driven by strong performance in its streaming division.

JD.com (JD) posted strong quarterly results, boosted by robust user growth and improved consumer confidence.

Coinbase Global (COIN) surged in premarket trading after it was announced that the crypto exchange will join the S&P 500 index, replacing Discover Financial Services (DFS) on May 19.

Oil Prices Steady Near Two-Week High

Crude oil prices held firm near recent highs as markets absorbed the positive sentiment from the U.S.-China trade deal.

At 05:40 ET, Brent crude rose 0.4% to $65.20 per barrel, while West Texas Intermediate (WTI) gained 0.5% to $62.26. Both benchmarks rose about 1.5% on Monday, hitting their highest closes since April 28.

Despite the cooling of tensions, analysts caution that key issues behind the trade conflict — such as the U.S. trade deficit with China — remain unresolved, keeping uncertainty in play for global markets.