Wall Street took a surprising turn on Tuesday, slipping into the red despite two seemingly bullish headlines: Former President Donald Trump’s declaration of a “DONE” trade deal with China, and fresh inflation numbers that came in softer than forecast.
So why are investors not celebrating?
A Deal—But With Doubts
On his Truth Social platform, Trump announced the U.S. and China had reached a “DONE” deal that would “protect American jobs and secure fair trade.” The announcement was light on specifics, but it came after months of escalating trade rhetoric and renewed tariff threats.
Markets, however, remained cautious. Traders have grown wary of political theatrics, and many are waiting for confirmation from Beijing before pricing in any long-term impact.
“Investors don’t want a tweet. They want a signed agreement with actual economic implications,” one strategist told Millionaire MNL.
Inflation Eases, But Recession Fears Linger
Adding to the mix, the latest CPI report showed inflation rising at a slower pace than expected. Core inflation, which strips out food and energy, was also down. This was supposed to boost markets by reinforcing hopes that the Fed might pause its rate hikes.
But instead of rallying, major indexes wobbled. The Dow Jones Industrial Average closed down 0.3%, the S&P 500 slipped 0.2%, and the Nasdaq barely held flat.
Why the disconnect? Analysts point to persistent worries about economic momentum. Even with easing prices, consumer sentiment remains weak and corporate earnings are showing signs of stress.
The Bigger Picture: Uncertainty Rules
While Trump’s proclamation grabbed headlines, institutional investors are increasingly immune to single-day political headlines, especially in an election year.
“What’s happening now is a sentiment tug-of-war,” said one hedge fund CIO. “Positive data is getting drowned out by fear of what comes next, whether it’s tariffs, tech decoupling, or geopolitical fallout.”
As mentioned by Millionaire MNL, global capital markets are becoming more volatile, and investors are leaning into safer assets like bonds, gold, and defensive stocks.
What to Watch Next
Markets may remain choppy until there’s official confirmation on the China deal and more clarity from the Fed. Meanwhile, bond yields have ticked lower, and traders are pricing in a 60% chance of a rate cut before year-end.
The White House has not commented on Trump’s announcement, and China’s foreign ministry issued a noncommittal statement saying it “welcomes mutual cooperation.”
