Dow Rises 142 Points as Trump Claims U.S.-China Trade Deal Is Ready, Pushes for Fed Rate Cut

U.S. markets edged higher Wednesday as investor optimism grew around a possible breakthrough in U.S.-China trade relations and cooling inflation data raised speculation about future Federal Reserve policy shifts.

The Dow Jones Industrial Average climbed 142 points, or 0.3%, while the Nasdaq rose 0.4%. The gains followed a burst of economic and political developments, including former President Donald Trump’s claim that a trade agreement with China is “done” and renewed calls for an aggressive interest rate cut by the Fed.

Trump took to Truth Social to hail the latest Consumer Price Index (CPI) figures, calling them “great numbers” and urging the Fed to slash rates by a full percentage point.

“Would pay much less interest on debt coming due,” he wrote in all caps, emphasizing the potential savings on federal interest payments.

The May CPI report showed a 2.4% year-over-year increase, slightly below economists’ forecasts of 2.5%. Core inflation, which strips out food and energy prices, held steady at 2.8%. Monthly inflation gains were modest, with both headline and core CPI rising just 0.1%, undercutting expectations.

The subdued inflation figures reinforced market expectations that price pressures are gradually easing. While investors hope this could nudge the Fed toward a rate cut later in the year, central bank officials have maintained a cautious stance, stressing the importance of sustained disinflation before any policy reversal.

At the same time, Trump’s assertion that a trade deal with China is finalized added to the market’s upbeat mood. According to Trump, the agreement came after two days of negotiations in London and outlines a tentative “framework deal” aimed at de-escalating tensions between the world’s two largest economies. However, the deal still requires formal approval from both Trump and Chinese President Xi Jinping and may not be finalized before the July 9 deadline to reimpose tariffs.

Relations between Washington and Beijing had soured after earlier talks in Geneva broke down. In recent weeks, China cut rare earth exports, and the U.S. moved to restrict visas for students linked to the Chinese Communist Party. Although the full scope of the new trade deal remains unclear, both sides have expressed cautious optimism.

For markets, a finalized trade agreement could ease uncertainty and stabilize global supply chains. Combined with the prospect of lower interest rates, the news has fueled increased risk appetite among investors, particularly in equities and potentially in digital assets, which tend to benefit from looser monetary conditions.