Fed Chair Powell says tariffs may increase inflation
Federal Reserve Chair Jerome Powell says the economy is in “good condition,” but notes inflation’s uncertainty.
U.S. stocks closed mostly higher on expectations China will export rare earths in exchange for looser China access to semiconductors from the U.S.
“I expect this to be a short meeting with a big strong handshake,” Kevin Hassett, director of the National Economic Council, said in a CNBC interview about talks overnight between the U.S. and China in London.
“Our expectation is that … immediately after the handshake, any export controls from the U.S. will be eased, and the rare earths will be released in volume, and then we can go back to negotiating smaller matters,” he added. Shares of Nvidia and AMD rose, while stock of the largest U.S rare earth miner, MP Materials, rallied 7.81%.
The talks follow a phone call between Trump and Chinese President Xi Jinping after Trump accused China of violating terms of a tariff pause agreed on last month in Switzerland.
The blue-chip Dow closed flat, or just 1.11 points lower, to 42,761.76; the broad S&P 500 gained 0.09%, or 5.52 points, to 6,005.88; and the tech-heavy Nasdaq added 0.31%, or 61.28 points, to 19,591.24. All three indexes closed higher last week, and the S&P 500 topped the 6,000 mark for the first time since Feb. 21 and is now around 2% from its record high. The benchmark 10-year Treasury yield fell to 4.478%.
Inflation and tax bill also in focus
Inflation data due this week and how the Senate may vote on the more than 1,000-page tax bill before it will also be scrutinized.
The May consumer price index report, due midweek, could provide insight into whether the tariff rollercoaster is reviving inflation. It is the first full month of data since President Donald Trump announced his aggressive tariff plan on April 2. Many of the harshest tariffs have been rolled back or paused, but some have kicked in.
Wholesale price data are due the next day and could give investors an idea of whether there is inflation coming down the pipeline to Americans. Wholesale prices are what businesses pay for their goods and services.
At the end of the week, a new consumer sentiment reading from the University of Michigan also includes data on inflation expectations.
Earlier, a survey by the New York Federal Reserve showed consumers expect lower inflation over the next year than they did a month ago.
Investors will also continue to watch the path of the so called “One, Big Beautful bill” in the Senate after a public and fierce tit-for-tat social media exchange between Tesla chief executive Elon Musk and Trump. Musk said the “pork-filled Congressional spending bill is a disgusting abomination,” and Trump called Musk “crazy.”
Corporate news
- Warner Bros. Discovery is splitting into two standalone publicly traded entertainment companies, separating its HBO Max streaming service, movie studio and TV production business from its cable networks. Shares of the entertainment company reversed early gains to close down about 3%.
- Facebook parent company Meta Platforms reportedly is in talks to make a multibillion-dollar investment into artificial intelligence startup Scale AI. Meta shares fell fractionally.
- EchoStar is considering filing for bankruptcy, as it faces a regulatory review of its spectrum licenses, according to the Wall Street Journal. Shares of the telecommunications company dropped 8.5%.
- Universal Health Services stock fell more than 6% after the hospital operator’s Chief Financial Officer Steve Filton said at a conference that procedural volumes “have been slower to recover back to historical levels than we might have imagined.” He also expressed concerns over how the tax bill could affect the hospital industry. The company earns a hefty amount from Medicaid, an area Trump wants to trim.
- United Natural Foods suffered a cyber attack that’s disrupting operations. Shares dropped 6.89%.
Cryptocurrency
Cryptocurrency platform Gemini said it confidentially submitted a draft registration statement with the Securities and Exchange Commission (SEC) for an initial public offering of class A shares. The IPO is expected after the SEC review process, it said in a release.
Bitcoin was last up 2.79% at $108,720.70.
This story was updated with new information.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
