Wall Street ends higher, gold retreats as trade talks progress boosts markets
A trader uses a phone, while working on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., April 22, 2025. REUTERS/Brendan McDermid/File Photo
NEW YORK :U.S. stocks advanced on Wednesday and Treasury yields reversed their three-day slide after word of a trade deal between the United States and Japan, while a report of a similar deal with the European Union provided welcome signs of progress in President Donald Trump's multi-front tariff negotiations.
All three major U.S. stock indexes closed in positive territory ahead of hotly anticipated quarterly reports from Alphabet and Tesla.
Gold prices backed away from a five-week high as risk-on sentiment lured investors away from the safe-haven metal.
Trump reached a trade agreement with Japan with just over a week remaining before an August 1 deadline. The deal spares Japan from bruising new levies on autos and other goods in exchange for a $500 billion package of investment and loans bound for the United States, and stands as the most significant trade deal yet to emerge since Trump's market-rattling "liberation day" tariff announcement in April.
The European Union and the United States are nearing an agreement on a similar trade deal that would impose 15 per cent tariffs on European imports, while waiving duties on some items, according to officials from the European Commission.
This follows a deal with the Philippines, and raises hopes that more deals could be in the offing.
"The storm clouds parting and the macro situation looks to be improving," said Sam Stovall, chief investment strategist of CFRA Research in New York. "Japan has signed a trade agreement, fingers are crossed for the EU, and investors are feeling optimistic that either more trade agreements will be announced before the August 1st deadline or postponements will be granted."
Second-quarter earnings season is underway, with 23 per cent of the companies in the S&P 500 having reported. Of those, 85 per cent have beaten Wall Street expectations, according to LSEG data.
Analysts currently predict year-on-year S&P 500 earnings growth, on aggregate, of 7.5 per cent, marking a solid improvement over the 5.8 per cent growth estimates as of July 1.
High-profile results from Magnificent 7 members Alphabet and Tesla will be closely scrutinized by investors, particularly any forward guidance that might shed light on expenditures and payoffs surrounding Artificial Intelligence (AI).
As major tech and tech-related megacaps post results, Wall Street's reliance on a small number of momentum stocks will be put to the test.
The Dow Jones Industrial Average rose 507.85 points, or 1.14 per cent, to 45,010.29, the S&P 500 rose 49.35 points, or 0.78 per cent, to 6,358.97 and the Nasdaq Composite rose 127.33 points, or 0.61 per cent, to 21,020.02.
Optimism over a potential U.S.-EU trade deal lifted European shares, with automakers leading the rally. Should the talks fail, the European Union is preparing to unveil retaliatory measures.
MSCI's gauge of stocks across the globe rose 10.16 points, or 1.09 per cent, to 939.94.
The pan-European STOXX 600 index rose 1.08 per cent, while Europe's broad FTSEurofirst 300 index rose 23.70 points, or 1.10 per cent.
Emerging market stocks rose 19.23 points, or 1.54 per cent, to 1,267.28. MSCI's broadest index of Asia-Pacific shares outside Japan closed higher by 1.53 per cent, to 666.81, while Japan's Nikkei rose 1,396.40 points, or 3.51 per cent, to 41,171.32.
U.S. Treasury yields moved higher after three straight days of declines as trade optimism fueled risk-on sentiment.
The yield on benchmark U.S. 10-year notes rose 5.2 basis points to 4.388 per cent, from 4.336 per cent late on Tuesday.
The 30-year bond yield rose 4.1 basis points to 4.944 per cent from 4.903 per cent late on Tuesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 5.5 basis points to 3.886 per cent, from 3.831 per cent late on Tuesday.
The dollar eased as the yen gathered strength and the euro inched higher as trade negotiations progressed.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.27 per cent to 97.20, with the euro up 0.18 per cent at $1.1774.
Against the Japanese yen, the dollar weakened 0.1 per cent to 146.48.
In cryptocurrencies, bitcoin fell 1.08 per cent to $118,485.91. Ethereum declined 2.99 per cent to $3,596.61.
Oil prices dropped as trade uncertainties ebbed.
U.S. crude dipped 0.09 per cent to $65.25 per barrel, while Brent settled at $68.51 per barrel, down 0.12 per cent on the day.
Spot gold fell 1.19 per cent to $3,390.12 an ounce. U.S. gold futures fell 1.29 per cent to $3,395.00 an ounce.
