S&P 500 Lukewarm as Rate Cut Optimism Offsets Tariff, Labor Market Fears

Published: June 12, 2025 by Omor IE

Key Points

Tariff fears are starting to return due to the April tariff pause expiry drawing closer.
The labor market may be cooling, since jobless claims have come in slightly higher than estimated.
So far this morning, the stock market is still up due to optimism about rate cuts.
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The S&P 500 is up slightly today despite tariff fears making a comeback in recent days. President Donald Trump made comments that he will impose unilateral tariffs on dozens of U.S. trade partners as the tariff pause is expiring. The 90-day tariff pause will expire on July 8, so countries would have to make deals exceptionally fast to prevent tariffs.

Trade talks haven’t even started with many of these countries, so they are unlikely to conclude before the tariff pause expires.

On top of that, there have been heightened tensions in the Middle East, and today’s macro figures have been a little more on the bearish side. The stock market is still not responding too negatively, largely due to expectations that rate cuts are more likely to kick in. Traders are pricing in two rate cuts this year. A September rare cut, followed by another one as early as October or November.

Here’s a market update as of 11:00 AM (ET) today.

The S&P 500 is up 13.71 points, or 0.23%.
The Nasdaq Composite is up 38.11 points, or 0.19%.
The Dow Jones Industrial Average is down 25.13 points, or 0.05%.

Macros

Producer Price Index (PPI) came in at 2.6% year-over-year, in line with estimates. CPI yesterday came in at 0.1% year-over-year, lower than estimates
Core PPI came in at 3% year-over-year vs. 3.1% estimated.
PPI month-over-month came in at 0.1% vs. the 0.2% estimate.
Core PPI month-over-month came in at 0.1% vs. the 0.3% estimate.
U.S. Initial Jobless Claims came in at 248,000 vs. the 242,000 forecast.
U.S. Continued Jobless Claims came in at 1.956 million vs. the 1.91 million forecast.
U.S. Federal Budget Balance at -$316 billion vs. the -$314 billion forecast.

Trade and Tariffs

Trade deals are mainly ongoing with major U.S. trading partners. The majority of these deals are yet to conclude, and Wall Street has been spooked by Trump saying that a deal with 55% tariffs on China is awaiting final approval from him and President Xi.

Canada’s Prime Minister Carney sees progress in trade deals, and the U.K. Business Secretary Reynolds said he is hopeful of a trade deal with the U.S. on car tariffs by the end of the week. U.S. Treasury Secretary Bessent said, “…we will see more trade deals coming very quickly.”

Regardless, the tariff pause deadline on many other non-major U.S. trading partners is closing in. There are dozens of countries that could be hit with high double-digit tariffs within a month, and if you combine all of them, they do constitute a notable portion of U.S. business inputs. This has spooked Wall Street.

Other Assets

Gold Futures are up 1.9% to $3,408.
Crude Oil Futures are down 0.8% at $67.6. However, heightened tensions with Iran have caused it to climb almost 7% in the past five days. In a worst-case scenario in the Arabian/Persian Gulf, it could hit $120 or more.
Natural Gas Futures are up 1.74% to $3.57.
Bitcoin is down 1% to $107,630.