On June 10 and 11, 2025, U.S. financial markets experienced notable volatility as investors grappled with a mix of encouraging inflation data, cautious optimism over a preliminary U.S.-China trade agreement, and escalating geopolitical tensions in the Middle East.
The S&P 500, after rallying close to record highs, paused its advance on June 10, slipping 0.27% to close at 6,022.24, snapping a three-day winning streak. This retreat was largely attributed to a slide in big tech stocks, with Apple Inc. falling about 2% and Tesla Inc. remaining mostly flat following a near 3% surge earlier in the day. Oracle Corp. bucked the trend late in the session, surging after reporting revenue that beat estimates. The Nasdaq Composite also fell 0.5% to 19,615.88, while the Dow Jones Industrial Average was essentially unchanged, shedding just 1.1 points to close at 42,865.77.
Earlier gains were fueled by surprisingly benign inflation data released on June 10 and 11. The Consumer Price Index (CPI) rose only 0.1% in May, below economists' expectations of 0.2%, with core CPI—which excludes volatile food and energy prices—also increasing by a modest 0.1%. Annually, headline inflation stood at 2.4%, slightly below the 2.5% forecast. Alexandra Wilson-Elizondo, global co-chief investment officer at Goldman Sachs Asset Management, noted, "Inflation in May was lower than anticipated, suggesting the tariffs aren't having a large immediate impact because companies have been using existing inventories or slowly adjusting prices due to uncertain demand." This softer inflation reading stoked hopes that the Federal Reserve might consider cutting interest rates later this year, especially if job market data weakens.
The bond market reacted strongly to the inflation report. On June 10, Treasuries climbed following a robust $39 billion sale of 10-year debt, with shorter maturities leading the advance. Two-year Treasury yields dropped below 4%, and on June 11, the yield on 10-year Treasury notes fell further to 4.413% from 4.472% the previous session. This rally in government bonds underscored investor caution amid mixed economic signals.
Meanwhile, the U.S. dollar weakened to its lowest point since 2023, reflecting the market's shift toward riskier assets and expectations of looser monetary policy. Bitcoin prices, however, fell 0.7% on June 11, snapping a five-day winning streak and closing at $108,775.
Trade relations between the United States and China remained a central focus for investors. After two days of talks in London, officials from both countries reached a consensus on a preliminary trade framework, aimed at restoring a fragile truce and easing tensions. The deal includes China approving exports of rare earth minerals, critical for various industrial applications, while the U.S. would roll back restrictions on advanced technology sales to China. However, the framework requires final approval from Presidents Donald Trump and Xi Jinping before implementation.
President Trump took to Truth Social to declare the deal "done, subject to final approval with President Xi and me," emphasizing that China would supply magnets and "any necessary rare earths" upfront. He also highlighted that the U.S. would allow Chinese students to attend American colleges and universities as part of the agreement. Trump asserted, "WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%." Commerce Secretary Howard Lutnick clarified that U.S. tariffs on Chinese imports would remain at current levels for the time being.
A White House official detailed the tariff structure under the agreement: the U.S. would maintain a 55% tariff on Chinese goods, composed of a 10% baseline reciprocal tariff, a 20% tariff targeting fentanyl trafficking, and a 25% tariff reflecting existing measures. China, in turn, would impose a 10% tariff on U.S. imports.
Despite the tentative trade progress, geopolitical concerns added a layer of uncertainty. Reports emerged on June 10 and 11 that the U.S. was preparing a partial evacuation of its embassy in Iraq due to heightened security risks amid escalating tensions in the Middle East. This development sparked a sharp 4.9% surge in U.S. crude oil futures, pushing prices to $68.15 a barrel—the largest single-day jump since October 3, 2024.
Adding to the regional unease, a senior Iranian official warned that Tehran would target U.S. bases in the area if nuclear negotiations faltered and conflict ensued. These threats unsettled investors, prompting a cautious tone across markets.
In the equity markets, the mood was mixed. Tesla's stock edged up 0.1% after CEO Elon Musk expressed regret over some recent negative social media posts about President Trump, admitting they had "gone too far." Meanwhile, shares of software development platform GitLab plunged nearly 11% following disappointing quarterly results, and videogame retailer GameStop fell 5.3% after reporting a decline in first-quarter revenue.
Market breadth on June 11 favored declining stocks, which outnumbered advancing ones in the S&P 500 by a ratio of 1.9 to 1. The S&P 500 posted 11 new highs and 2 new lows, while the Nasdaq recorded 80 new highs and 43 new lows. Trading volume was relatively heavy, with 18.9 billion shares changing hands compared to the 20-day average of 17.8 billion.
While the S&P 500 remains just below its February 2025 record high, investors remain cautiously optimistic. John Praveen, managing director at Paleo Leon in Princeton, New Jersey, remarked, "The worst-case scenario is probably behind us. There's a little bit of face-saving for both sides. They got an agreement. The question is whether it will be implemented." Meanwhile, traders are pricing in a roughly 70% chance that the Federal Reserve will cut interest rates by the September policy meeting, according to CME Group's FedWatch tool.
On the political front, President Trump and Vice President JD Vance continued to pressure the Federal Reserve to slash borrowing costs. Trump called for a full percentage point cut in interest rates, while Vance accused the Fed of "monetary malpractice" for not acting sooner.
Domestic unrest also flared in Northern Ireland, with riots erupting for the third consecutive night on June 11. Rioters attacked police with petrol bombs in Ballymena and set fire to a leisure center in Larne, underscoring ongoing regional tensions unrelated to the U.S. markets but adding to the global atmosphere of uncertainty.
In summary, the U.S. markets in mid-June 2025 are navigating a complex landscape shaped by encouraging inflation data, a cautiously optimistic trade truce with China, and escalating geopolitical risks in the Middle East. Investors are balancing hopes for Federal Reserve rate cuts against the backdrop of tariff policies and global tensions, setting the stage for a potentially volatile period ahead.
