Medora Lee, USA TODAY
4 min read
In This Article:
U.S. stocks ended higher, with the broad S&P 500 and tech-heavy Nasdaq climbing to record closes on trade optimism.
Sentiment was dented slightly and only briefly in the afternoon after President Donald Trump said on social media trade talks with Canada were terminated, effective immediately, over a digital services tax on U.S. tech firms.
"We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period," Trump wrote. Canada is the U.S.' second largest trading partner.
The blue-chip Dow closed up 1%, or 432.43 points, to 43,819.27, while the S&P 500 gained 0.52%, or 32.11 points, to 6,173.13 and the Nasdaq rose 0.52%, or 105.54 points, to 20,273.46. The S&P 500 and Nasdaq had been within striking distance of their record highs for the past couple of days but hadn't mustered enough energy to hurdle them until now.
The benchmark 10-year Treasury yield inched up to 4.275%.
Stocks jumped at the open on trade deal optimism after Trump said the U.S. finalized a deal with China. The final China deal includes a commitment from China to deliver rare earths used in everything from wind turbines to jet planes, Commerce Secretary Howard Lutnick told Bloomberg. It also includes easier tech restrictions, said China’s Ministry of Commerce.
Lutnick also said the U.S. was nearing agreements with ten other trading partners.
Meanwhile, European Commission President Ursula von der Leyen and Lutnick expressed confidence a deal between the EU and U.S. coud be struck soon, according to Bloomberg. Lutnick said the EU had picked up the pace of negotiations in recent weeks.
Treasury Secretary Scott Bessent said in an interview on Fox Business he expected trade deals with 18 key trading partners to be wrapped up by Labor Day in September, suggesting Trump's early July deadline would be extended and higher tariffs wouldn't kick in yet.
Stocks also found support from economic data.
Americans felt better in June than in May, according to the University of Michigan's consumer sentiment survey. Its sentiment reading rose to 16.3% to 60.7 in June from May. Most of the improvement came as people's inflation expectations fell.
Before the opening bell, the Fed's preferred inflation gauge, or personal consumption expenditures (PCE) price index, also rose 2.3% annually, as expected. The so-called core rate excluding food and energy, rose 2.7%, slightly higher than the 2.6% mean forecast.
The "inflation report shouldn’t be enough to give markets a significant scare, but it probably dashes the slim hopes investors had for a July rate cut," said Bret Kenwell, U.S. investment analyst at trading platform eToro.
