Stock Market Update: S&P 500 Closes at New High as Trade Deal Boosts Futures

The S&P 500 narrowly posted another record close on Tuesday, marking its 11th closing high of 2025. Investors weighed the latest round of earnings reports alongside fresh trade developments, contributing to cautious optimism in the market. So far, nearly 90 S&P 500 companies have reported their second-quarter results, with almost 85% surpassing analysts’ expectations, according to FactSet. However, beyond the headline numbers, market participants are closely monitoring corporate commentary on macroeconomic stability, the effects of tariffs, and trends in demand and capital spending related to artificial intelligence.

Anticipation is building ahead of earnings from key technology giants, with Google parent Alphabet and Tesla set to report on Wednesday. These companies are part of the “Magnificent Seven,” the megacap tech group expected to drive a significant portion of earnings growth this season. Their results are seen as pivotal in shaping investor sentiment for the rest of the quarter.

Meanwhile, stock futures rose early Wednesday following President Donald Trump’s announcement that the U.S. had reached a trade agreement with Japan. The deal includes reciprocal tariffs of 15% on Japanese exports to the U.S., offering a glimmer of progress amid broader global trade tensions. The president also indicated that the U.S. is engaging with European officials in an effort to finalize a trade deal with the European Union, which helped further boost optimism among investors.

US Market Previous Day:

The S&P 500 edged up 0.06% on Tuesday to close at 6,309.62, marking its 11th record close of the year. The Dow Jones Industrial Average gained 179.37 points, or 0.40%, ending at 44,502.44. However, the Nasdaq Composite declined 0.39% to 20,892.69, weighed down by losses in the technology sector. This marked the first negative session for the Nasdaq in seven days, snapping a winning streak.

Chip stocks were among the biggest laggards. Sentiment in the semiconductor space turned cautious following a Wall Street Journal report that SoftBank and OpenAI's ambitious $500 billion AI initiative has run into early obstacles and is scaling back its short-term plans. As a result, Broadcom dropped over 3%, while Nvidia – a key beneficiary of the AI boom – fell more than 2%.

Earnings disappointments also dragged individual names lower. Shares of Lockheed Martin plunged nearly 11% after the aerospace and defense giant reported second-quarter revenue that missed analyst expectations. Philip Morris shares dropped 8% following a similar revenue miss for the tobacco company.

In contrast, health-care stocks provided a bright spot. The sector outperformed the broader market with a nearly 2% gain, supported by strong results from several companies. IQVIA led the S&P 500 with a surge of almost 18% after delivering better-than-expected earnings and revenue. Other notable gainers included Amgen and Merck, helping to anchor the sector's rally and attract defensive interest from investors amid pockets of weakness elsewhere.

US Futures in Green:

• Dow Jones Industrial Average futures lead the pack with gains of 0.54%
• S&P 500 futures showed increased by 0.35%
• Nasdaq Composite futures showed meagre gains of 0.08%.

Biggest Premarket Movers

• Texas Instruments saw its shares tumble more than 9%. This drop occurred despite topping Wall Street estimates for second-quarter sales and earnings, as its third-quarter guidance fell short of expectations. This contrasts sharply with the stock's 46% surge in the preceding three months.
• CoStar Group shares rose 1% after the online real estate marketplace reported stronger-than-expected second-quarter earnings. The company posted adjusted earnings of 17 cents per share on $781.3 million in revenue, exceeding analyst forecasts.
• Enphase Energy shares slid more than 5%. Although the company surpassed second-quarter earnings expectations, its current-quarter revenue guidance of $330 million to $370 million fell short of the consensus estimate of $368 million.
• Intuitive Surgical shares slipped 1%, even after the robotic surgery company reported a beat on both second-quarter earnings and revenue. Intuitive Surgical announced adjusted earnings of $2.19 per share on $2.44 billion in revenue, both exceeding analyst predictions.
• Cal-Maine Foods saw its shares jump nearly 4%. The egg producer reported significantly higher fiscal fourth-quarter earnings of $7.04 per share, up from $2.32 per share in the prior year. Revenue also surged to $1.1 billion from $640.8 million, complemented by an 18% increase in layer hens.
• SAP's U.S.-listed shares slipped 2% after the enterprise software company reported second-quarter revenue of 9.03 billion euros, missing the consensus estimate of 9.08 billion euros.

Tariff Update:

President Donald Trump on Tuesday announced a broad trade agreement with Japan, calling it a “massive” deal that includes reciprocal tariffs of 15% on Japanese exports to the U.S. Notably, tariffs on Japanese autos will also be lowered to that level from the previous 25%, a significant development for Japan’s economy, where auto exports to the U.S. accounted for 28.3% of all shipments in 2024. The deal will also see Japan open up its market to American exports, including cars, trucks, rice, and agricultural products. Japanese Prime Minister Shigeru Ishiba confirmed the auto tariff reduction, as reported by Reuters.

Trump also revealed that the U.S. had concluded a trade deal with the Philippines, which includes a 19% tariff on Filipino goods entering the U.S., while the Philippines will not impose any tariffs on U.S. imports. Trump praised the Philippines for adopting an “open market” stance in its dealings with America. However, the Philippines has yet to confirm the agreement. Earlier this month, the country was among several nations that received a notification from the Trump administration regarding new tariff rates set to begin on August 1. Trump’s July 9 letter had initially proposed a 20% tariff rate on imports from the Philippines.

In a separate development, the U.S. and Indonesia have agreed to the framework of a trade pact that would significantly lower tariffs on U.S. exports to Jakarta. As part of the agreement, Indonesia would eliminate most of its tariffs on American goods, while the U.S. would impose a 19% tariff on Indonesian imports. This rate is well below the 32% blanket duty that Indonesia had been facing since the Trump administration’s “liberation day” tariff policy announced in April. Both nations will continue to negotiate the finer details of the deal, which has been labeled an “Agreement on Reciprocal Trade.”

With agreements now progressing with Japan, the Philippines, and Indonesia, the Trump administration is shifting focus toward the European Union. The U.S. is pressing for an agreement by August 1, ahead of a scheduled 30% tariff on EU imports. A European Commission spokesperson noted that EU Trade Commissioner Maros Sefcovic will speak with U.S. Commerce Secretary Howard Lutnick on Wednesday to move negotiations forward. The EU’s initial set of retaliatory tariffs, affecting €21 billion worth of U.S. imports, remains on hold, though Brussels is preparing additional measures should talks falter.

Key Economic Data/News:

Mortgage rates edged up last week to their highest levels in a month, yet overall demand for home loans showed minimal change. According to the Mortgage Bankers Association, total mortgage application volume rose 0.8% from the previous week on a seasonally adjusted basis. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $806,500) increased slightly to 6.84% from 6.82%. Points, including the origination fee for loans with a 20% down payment, remained steady at 0.62.

Refinance applications, which tend to respond more sharply to interest rate changes, fell 3% week-over-week. However, they were still 22% higher compared to the same week a year ago, when rates were only marginally lower. The annual increase appears significant primarily due to the extremely low volume of applications last year. Meanwhile, mortgage applications for home purchases climbed 3% for the week and were also 22% higher than a year ago.

Earnings Season/Company News:

Investors are closely watching the upcoming earnings releases from Tesla and Alphabet, due after Wednesday’s market close. These are the first of the highly scrutinized megacap tech firms — often referred to as the “Magnificent Seven” — to report this quarter. Tesla’s report is particularly notable, as investors weigh the potential business impact of CEO Elon Musk’s recent political activity. The stock has been the weakest performer among its peer group so far this year.

Alphabet’s results will also be closely dissected, especially as the search and advertising environment evolves in the wake of rapid advancements in artificial intelligence. Market participants are keen to hear how Google is navigating this shifting landscape.

Elsewhere in tech, shares of Texas Instruments plunged more than 10% in premarket trading after the company issued a weaker-than-expected forecast for the third quarter. The chipmaker projected earnings between $1.36 and $1.60 per share, with the midpoint falling short of analysts’ estimate of $1.50 per share, according to LSEG. Still, second-quarter results topped expectations, with earnings of $1.41 per share on $4.45 billion in revenue, versus consensus estimates of $1.35 per share on $4.36 billion.

In the auto sector, U.S.-listed shares of Honda and Toyota surged in premarket trading following President Trump’s announcement of a trade deal with Japan. Honda jumped 11%, while Toyota gained nearly 13%, as investors welcomed the news of reduced auto tariffs and increased U.S.-Japan trade cooperation.

Global Market Trends:

European stocks were trading broadly higher in early afternoon deals, supported by strength in the auto sector. The Stoxx 600 index rose 0.95%, with automobile shares leading gains, up 3.6%. In the U.K., the FTSE 100 pulled back slightly after hitting a record intraday high above 9,070 points, but remained up 0.44%. Global investor sentiment has been lifted by the recently announced U.S.-Japan trade deal, which reduced auto tariffs and spurred optimism around broader trade negotiations, particularly with the European Union.

The Stoxx Europe Automobiles and Parts index surged 4.3% following the trade announcement. In Asia, Japan’s Nikkei 225 rallied 3.7% as automaker stocks soared on the news that the U.S. would lower auto tariffs to 15% from the previously threatened 25%. Shares of Mazda Motor surged 18%, while Toyota Motor jumped 14%. South Korean automakers also rose, fueled by expectations that their own trade talks with the U.S. might yield similar tariff reductions. Elsewhere in Asia, Chinese blue-chip stocks rose 0.7% before losing momentum, while MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 1.2%.

Debt Market:

In the bond market, U.S. Treasury yields edged higher on Wednesday following comments from Treasury Secretary Scott Bessent that calmed concerns about instability at the Federal Reserve. His remarks helped refocus attention on the broader interest rate outlook.

The yield on the benchmark 10-year Treasury note climbed slightly, rising more than 2 basis points to 4.362%. The 2-year yield was also up, gaining just under 2 basis points to 3.844%. Meanwhile, the 30-year Treasury yield increased more than 2 basis points to 4.931%.

Commodities:

Gold prices remained flat on Wednesday as news of the U.S.-Japan trade agreement announced by President Donald Trump boosted investor risk appetite. This shift in sentiment reduced the appeal of safe-haven assets like gold. Additionally, a stronger U.S. dollar and rising Treasury yields exerted further pressure on the metal. Spot gold pared back some of its recent gains, with the trade deal prompting a retreat from the safe-haven demand that had driven a three-day rally. While bullion bulls appear to be taking a breather, the market remains sensitive to shifts in macroeconomic and geopolitical drivers.

In contrast, spot silver edged up 0.3% to $39.39 per ounce, marking its highest level since late September 2011. Silver's robust supply-demand fundamentals continue to support its upward trajectory, with many analysts suggesting the metal is due for a re-rating. Now that silver is trading at a fresh 14-year high, the key question is whether market conviction will be strong enough to push it beyond the psychologically significant $40 level.

Oil prices declined for the fourth straight session on Wednesday, as investors digested the implications of the U.S.-Japan tariff agreement and looked ahead to upcoming U.S. inventory data. Both Brent and WTI benchmarks fell around 1% in the previous session after the European Union signaled possible countermeasures against new U.S. tariffs. Market participants are awaiting the latest U.S. crude inventory report from the Energy Information Administration, due later in the day. In a potentially bullish development for oil, the U.S. energy secretary stated on Tuesday that the U.S. is considering sanctions on Russian oil as part of broader efforts to end the war in Ukraine.

Market Sentiment:

As the recent rally in equities pushes major indexes to new highs, investors are increasingly focused on whether the market has more room to run. The S&P 500 notched its 11th record close of the year on Tuesday, underscoring strong investor sentiment. However, with valuations stretched and several key earnings still ahead, traders are treading carefully.

Market participants are also closely monitoring developments on the trade front. Treasury Secretary Scott Bessent signaled that the U.S. is likely to extend its deadline to reach a trade agreement with China, a move that helped ease short-term concerns. Bessent further noted plans to meet with Chinese officials in Stockholm next week, keeping hopes alive for further diplomatic progress.

Investor attention now turns to earnings, with results from Alphabet and Tesla due after the bell. These will be the first reports of the season from the megacap tech sector—an area that has played a central role in the market’s rally. Tesla, in particular, faces added scrutiny given CEO Elon Musk’s political entanglements and its lagging stock performance relative to other Magnificent Seven peers. Meanwhile, Alphabet’s results will be dissected for insights into digital advertising trends and AI investments.

Other notable names reporting include Chipotle Mexican Grill and Mattel, adding to an already packed earnings week. So far, of the 105 S&P 500 companies that have reported, over 86% have exceeded Wall Street estimates, according to FactSet—fueling optimism about corporate resilience.

On the economic data front, investors are watching for existing home sales figures due Wednesday morning, which could offer clues about the health of the housing market amid persistent rate pressures.