Optimism over a new U.S.-China trade agreement sparked an early rally on Wall Street, with both sides confirming details of a framework to implement the Geneva deal. The U.S. pledged to lift restrictive measures, while China agreed to review export-controlled items. Commerce Secretary Lutnick added that trade deals with ten more nations are expected soon. However, markets fell sharply after President Trump announced an end to talks with Canada over its digital tax, warning of upcoming tariffs.

The Commerce Department released a closely watched report that included the Federal Reserve's preferred readings on consumer price inflation. The report showed consumer prices in the U.S. crept up in line with expectations in the month of May while the report also showed core consumer prices rose by slightly more than expected.

University of Michigan too released a report showing consumer sentiment in the U.S. improved by slightly more than expected in the month of June. Retail stocks turned in a strong performance, driving the Dow Jones U.S. Retail Index up by 1.8% to its best closing level in over four months. Airline stocks displayed considerable strength , as reflected by the 1.5% gain posted by the NYSE Arca Airline Index. Gold stocks moved sharply lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 4.0%.

Asia-Pacific stocks turned in another mixed performance. Japan's Nikkei 225 Index shot up by 1.4%, while China's Shanghai Composite Index slid by 0.7%. The major European markets all moved to the upside on the day. The French CAC 40 Index surged by 1.8%, the German DAX Index jumped by 1.6% and the U.K.'s FTSE 100 Index climbed by 0.7%.

In the bond market, treasuries gave back ground after trending higher over the past several sessions. As a result, the yield on the benchmark ten-year note which moves opposite of its price, rose 3 bps to 4.28%.

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