The S&P 500 closed at a fresh record high on Wednesday, fueled by renewed optimism over global trade following a new agreement between the U.S. and Japan. The upbeat sentiment raised hopes that the Trump administration could secure further deals, helping to avert a broader trade war.
At 4:00 p.m. ET, the Dow Jones Industrial Average surged 507 points, or 1%, while the S&P 500 gained 0.80% and the NASDAQ Composite added 0.6%.
Trade Optimism Reignites After U.S.-Japan Deal
President Donald Trump announced a “massive” trade agreement with Japan that would impose a 15% tariff on Japanese imports—lower than the initially threatened 25%. The deal also includes a $550 billion investment from Japan into the U.S. economy and expanded market access for American autos and agricultural goods, particularly rice.
Trump hinted at more deals on the horizon, stating, “We have Europe coming in tomorrow, and the next day, we have some other ones coming in.” A potential deal with the European Union could help avoid 30% tariffs on EU imports, currently set to take effect on August 1.
While the Japan agreement marks progress, analysts and the Federal Reserve continue to warn that ongoing tariff uncertainty could fuel inflation.
Earnings Spotlight: Tesla and Alphabet
After the market close, investors turned their attention to second-quarter earnings from Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOGL)—the first of Wall Street’s “Magnificent Seven” to report this season.
Tesla is under scrutiny as it deals with shrinking margins, softer demand, and a price war in China. Markets will also watch for updates on the company’s AI and robotics efforts, which CEO Elon Musk has pitched as Tesla’s future growth drivers.
Alphabet’s results are expected to shed light on how artificial intelligence is boosting revenue and whether the company plans to ramp up investment in AI infrastructure. As a leading “AI hyperscaler,” Alphabet is one of the top spenders in the space.
Broader Earnings Roundup
- AT&T (NYSE:T) rose after beating Q2 estimates, driven by more monthly wireless subscribers despite slower broadband growth.
- Texas Instruments (NASDAQ:TXN) fell after issuing a weak profit outlook, raising concerns over declining demand for analog chips possibly linked to trade disruptions.
- Hasbro (NASDAQ:HAS) dropped despite strong earnings, thanks to record sales from Magic: The Gathering.
- GE Vernova (NYSE:GEV) climbed on better-than-expected results and raised full-year guidance, citing strong demand for power infrastructure.
- Hilton Worldwide (NYSE:HLT) slipped as its RevPAR (revenue per available room) fell 0.5% year-over-year on softer occupancy rates.
So far, roughly 17% of S&P 500 companies have reported earnings this season, with about 85% beating expectations.
Meme Stock Rally Resurfaces
The meme stock trend made a comeback, with GoPro (NASDAQ:GPRO) and Krispy Kreme (NASDAQ:DNUT) joining the ranks of recent retail-favorite surges. Other names gaining traction include Rocket Companies (NYSE:RKT), Opendoor Technologies (NASDAQ:OPEN), and Kohl’s (NYSE:KSS).
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