Tuesday saw modest gains in U.S. stocks, with the S&P 500 setting a new record following President Trump’s announcement of new trade agreements with Indonesia and the Philippines and Treasury Secretary Scott Bessent’s endorsement of Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average increased 179 points, or 0.4%, to 44502.44, while the S&P 500 increased by 0.1% to 6309.62. Due to pressure from declining tech stocks, such as Nvidia, the Nasdaq Composite fell 0.4% to 20892.68. Stock hit record highs amidst a few concerns of the entire market.
The S&P 500 hits new record on Trump trade deal
Trump used Truth Social to announce the trade agreements, saying that Indonesia would remove the majority of tariffs on American goods and that U.S. exports to the Philippines would be subject to “ZERO Tariffs.” The United States will impose a 19% tariff on imports from both nations in exchange. Investors saw the agreements as a sign that more deals may follow.
In a Fox Business interview, Bessent stated that trade relations with China are in a “very good place” and hinted that the current truce with Beijing might last past its expiration on August 12. Speaking about Powell’s future at the Fed, he said the chairman “should serve out the remainder of his term if he wants.”
The encouraging remarks coincide with growing hostilities between the central bank and Trump. The president’s criticism of Powell for maintaining interest rates and his suggestion to fire him have raised concerns about Fed independence.Markets have held up well in spite of these political overhangs. Scott Sheridan, CEO of Tastytrade, said “It reminds me of the old adage that, if it looks too good to be true, it probably is. There are too many potential structural issues.” As a long-term concern, he pointed to the rising costs of debt servicing brought on by Trump’s $3.4 trillion tax and spending plan.
The winners and losers
A flurry of earnings reports that show the early effects of tariffs are also being processed by investors. After General Motors disclosed that taxes on automobiles and auto parts reduced its earnings by $1.1 billion, the company’s stock fell 8.1%. After lowering its earnings outlook because of tariff costs, RTX fell 1.6%. The S&P 500’s worst-performing company, Lockheed Martin, fell 11% after incurring more than $1.7 billion in special charges in the quarter.
On the plus side, home builders came together. Despite ongoing pressure from high mortgage rates, both companies exceeded expectations, causing D.R. Horton to jump 17% and PulteGroup to gain 12%. As meme-stock traders on Reddit’s WallStreetBets targeted the heavily shorted retailer, Kohl’s stock unexpectedly surged 38%. A weaker dollar helped gold futures jump 1.1% to an all-time high of $3,439.20 per ounce. Investor caution was reflected in the 10-year Treasury yield’s decline to 4.337%. The world’s markets were not all the same. French and German stocks pulled down Europe’s Stoxx 600, which fell 0.4%. The FTSE 100 in the UK closed at a record close, up 0.1%. Major indexes in mainland China and Hong Kong ended the day higher in Asia.
Featured Image Credit: Rômulo Queiroz: Pexels: Thank You!
