Stock Index Futures Tread Water as Investors Await Outcome of U.S.-China Trade Talks

June S&P 500 E-Mini futures (ESM25) are up +0.03%, and June Nasdaq 100 E-Mini futures (NQM25) are up +0.05% this morning as trade talks between the U.S. and China extended into a second day, with investors cautiously awaiting the outcome.

While the first day of trade negotiations on Monday yielded no breakthrough, U.S. officials had expressed optimism that the two sides could ease tensions over shipments of technology and rare earth elements. U.S. Commerce Secretary Howard Lutnick said talks between Washington and Beijing were “fruitful,” and Treasury Secretary Scott Bessent described them as a “good meeting.” “We are doing well with China. China’s not easy,” U.S. President Donald Trump told reporters at the White House on Monday. “I’m only getting good reports.”

In yesterday’s trading session, Wall Street’s main stock indexes closed mixed. Chip stocks gained ground, with Advanced Micro Devices (AMD) and Arm Holdings (ARM) climbing over +4%. Also, Tesla (TSLA) advanced more than +4% after U.S. President Trump reaffirmed his intention to end the spat with CEO Elon Musk, stating he would keep Starlink internet service at the White House and wished his billionaire backer “very well.” In addition, Goodyear Tire & Rubber (GT) surged over +10% after BNP Paribas Exane upgraded the stock to Outperform from Neutral with a price target of $15. On the bearish side, Intuitive Surgical (ISRG) slumped more than -5% after Deutsche Bank downgraded the stock to Sell from Hold with a price target of $440.

Economic data released on Monday showed that U.S. Wholesale Inventories rose +0.2% m/m in April, compared with the flat preliminary reading and +0.4% m/m in March.

“Markets have moved higher on tariff postponement and the perception that they will be more moderate than initially announced. We expect markets to remain headline-sensitive, as trade deals take time to negotiate and unsettling tariff news is likely to cause noticeable volatility,” said Richard Saperstein at Treasury Partners.

Meanwhile, market watchers are keenly awaiting the U.S. consumer inflation report for May, scheduled for release on Wednesday. The report will be scrutinized for any indications that Trump’s tariffs are feeding through into prices. Barclays economists said in a note that they anticipate the inflation data will show “the first signs of tariff-related price pressures.” The CPI is expected to increase to +2.5% y/y from +2.3% y/y in April, while the core CPI, which excludes volatile food and fuel prices, is expected to increase to +2.9% y/y from +2.8% y/y in April.

U.S. rate futures have priced in a 99.9% chance of no rate change at next week’s FOMC meeting. Despite President Trump’s push to pressure U.S. central bankers into swiftly lowering interest rates, Fed Chair Jerome Powell and his colleagues have signaled they have time to evaluate the impact of trade policy on the economy, inflation, and employment.

Today, investors will likely focus on an earnings report from GameStop (GME) as the video-game retailer ventures into the cryptocurrency space. The company, which ignited the meme stock craze in 2021 with its meteoric rise, announced in late May that it had purchased $500 million in bitcoin. As its retail video game business struggles, GameStop is looking to follow the playbook of Strategy (MSTR) and other firms shifting their business models toward bitcoin accumulation.

The U.S. economic data slate is empty on Tuesday.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.453%, down -0.67%.

The Euro Stoxx 50 Index is down -0.26% this morning as investors adopt a cautious stance ahead of the result of the U.S.-China trade talks in London. Financial stocks led the declines on Tuesday, with UBS Group AG (UBSG.Z.EB) sliding over -7% following Swiss government proposals that would require the bank to hold an additional $26 billion in capital. At the same time, automobile and healthcare stocks outperformed. Data from the Office for National Statistics released on Tuesday showed that the U.K.’s labor market softened in the three months to April as wage growth moderated and the unemployment rate climbed to its highest level since May-July 2021, providing some reassurance to Bank of England policymakers. Separately, data showed that Italy’s monthly industrial output unexpectedly jumped in April. In addition, the Sentix survey of investor sentiment showed signs of an upturn in Germany and the Eurozone in June. Meanwhile, European Central Bank Governing Council member Francois Villeroy de Galhau said on Tuesday that the central bank could still act swiftly to adjust interest rates even after an eighth consecutive cut “normalized” monetary policy. In other news, European Defence Commissioner Andrius Kubilius said on Tuesday that the European Commission will unveil a proposal next week aimed at providing governments with greater flexibility on defence procurement and facilitating easier access to European funding. In other corporate news, Novo Nordisk A/S (NOVOB.C.DX) gained over +2% after the Financial Times reported that activist hedge fund Parvus Asset Management is building a stake in the drugmaker. Also, Bellway Plc (BWY.LN) rose more than +4% after the British homebuilder boosted its annual production volume forecast.

U.K.’s Average Earnings ex Bonus, U.K.’s Unemployment Rate, Italy’s Industrial Production, and Eurozone’s Sentix Investor Confidence Index were released today.

U.K. Average Earnings ex Bonus stood at 5.2% in the three months to April, weaker than expectations of 5.4%.

The U.K. Unemployment Rate was 4.6% in the three months to April, in line with expectations.

The Italian April Industrial Production arrived at +1.0% m/m, stronger than expectations of no change m/m.

The Eurozone June Sentix Investor Confidence Index came in at 0.2, stronger than expectations of -5.3.

Asian stock markets today closed mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.44%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.32%.

China’s Shanghai Composite Index reversed earlier gains and closed lower today as investors remained cautious ahead of the outcome of the ongoing U.S.-China trade negotiations. The benchmark index suddenly fell in the afternoon session, though the cause of the decline wasn’t apparent. Some investors cited an earlier commentary posted on a social media account linked to state broadcaster CCTV, which stated that “the U.S. should realistically view the progress made and revoke negative measures against China.” It added that Beijing is sincere about trade talks with the U.S. but remains firm in its principles. Fu Shifeng, investment director at Cheng Zhou Investment, said, “The market is too sensitive. People seem to be speculating that the talks didn’t go well.” Meanwhile, rare-earth stocks extended their rally on Tuesday, as the sector remains a key point of contention between the two sides. Citi analysts said that China will likely make only limited concessions on rare earth export controls, possibly in return for U.S. steps to ease export restrictions or lower tariffs. The meeting comes at a crucial moment as China’s exports to the U.S. last month recorded their steepest decline in more than five years, while domestic deflationary pressures intensified. In corporate news, CSPC Pharmaceutical rose over +2% in Hong Kong after HSBC raised its price target on the stock.

Japan’s Nikkei 225 Stock Index closed slightly higher today amid investor optimism surrounding the government’s efforts to stabilize the debt markets. Real estate and pharmaceutical stocks outperformed on Tuesday. Japanese Finance Minister Katsunobu Kato said on Tuesday that the government will take steps to maintain confidence in the bond market, a day after Reuters reported the finance ministry is weighing buybacks of some super-long-dated bonds to curb rising yields. However, the benchmark index’s gains were limited as investors cautiously awaited the outcome of the U.S.-China trade talks. Meanwhile, Bank of Japan Governor Kazuo Ueda on Tuesday reiterated the central bank’s willingness to continue raising interest rates if underlying inflation approaches its 2% target. Still, Ueda said the central bank remains some distance from its inflation target, leading investors to scale back expectations for a rate hike this year. Also, four members of Nomura’s Global Markets Research said that the BOJ may encounter “considerable obstacles” to raising rates this year, pointing to the impact of U.S. tariffs on the economy and prices, the Japanese government’s economic stimulus efforts, and the drafting of the FY26 national budget. On the trade front, the Nikkei business daily reported that Japan’s tariff negotiator, Ryosei Akazawa, will travel to the U.S. for his sixth round of tariff negotiations and to Canada from this Friday through June 18th, as the Japanese government aims to finalize a trade deal on the sidelines of the Group of Seven summit. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +0.75% to 22.95.

Pre-Market U.S. Stock Movers

Tesla (TSLA) rose over +2% in pre-market trading, extending yesterday’s gains after U.S. President Trump reaffirmed his intention to end the spat with CEO Musk.

U.S.-listed shares of Taiwan Semiconductor Manufacturing (TSM) gained more than +1% in pre-market trading after the world’s largest contract chip maker reported a 40% year-over-year increase in revenue for May.

Casey’s General Stores (CASY) climbed over +10% in pre-market trading after the convenience store chain posted upbeat FQ4 results and said it expects FY26 inside same-store sales to increase 2% to 5%.

McDonald’s (MCD) fell more than -1% in pre-market trading after Redburn Atlantic double-downgraded the stock to Sell from Buy with a price target of $260.

Calavo Growers (CVGW) plunged over -15% in pre-market trading after the avocado distributor reported weaker-than-expected FQ2 results.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - June 10th

GameStop (GME), JM Smucker (SJM), Core Main (CNM), Gitlab (GTLB), Academy Sports (ASO), United Natural Foods (UNFI), Dave & Buster’s Entertainment (PLAY), Stitch Fix (SFIX), Designer Brands (DBI), PetMed Express (PETS).