Closing Recap

U.S. stocks surged to new all-time highs, with the S&P 500 and Nasdaq leading the charge, as investors cheered significant progress in U.S. trade negotiations with Japan and the EU; gold pulled back, oil was little changed, while Treasury yields and the dollar saw mixed action. 

Key Takeaways 

• New Record Highs: The S&P 500 and Nasdaq Composite closed at new all-time highs, and the Dow surged near 45K as positive trade news fueled a strong rally. 
• Major Trade Breakthroughs: Markets rallied after President Trump announced a 15% tariff deal with Japan and reports emerged of the U.S. and EU nearing a similar agreement, averting the threatened August 1st tariff hikes. 
• Broad Rally, Small Caps Surge: Gains were widespread, with small caps (Russell 2000) rallying over 1.5% and the S&P 500 posting its 12th closing high of the year. 
• Earnings Season Strong So Far: Early Q2 earnings reports have shown a high beat rate (85%), providing a solid fundamental backdrop for the rally. 
• Gold Eases, Oil Pauses: Gold prices fell as trade de-escalation reduced safe-haven demand. Crude oil finished nearly flat after a volatile session, weighing trade optimism against inventory data. 
• Dollar Mixed, Yields Rise: The U.S. dollar was mixed against major currencies, while Treasury yields rose on the strong risk-on sentiment. 
• Bitcoin Consolidation: Bitcoin and other cryptocurrencies saw some profit-taking after hitting recent record highs. 
• Economic Data Disappoints: Existing Home Sales for June fell short of expectations, indicating ongoing softness in the housing market. 

Market Overview

Another day brought another round of record highs for U.S. equity markets, as investors enthusiastically welcomed major breakthroughs on the international trade front. The primary driver of today’s powerful rally was President Trump’s announcement of a finalized trade deal with Japan, which sets tariffs at a more manageable 15% on key imports like autos, a significant de-escalation from the previously threatened 25%. This news sent Japanese auto stocks and the Nikkei soaring overnight. The positive sentiment was amplified around midday by reports that the U.S. and European Union are also closing in on a similar 15% tariff agreement, effectively averting the steep 30% levies that were set to take effect on August 1st. 

Index	Up/Down	% Change	Last
DJ Industrials	507.85	0.0114	45010
S&P 500	49.34	0.0078	6358
Nasdaq	127.33	0.0061	21020
Russell 2000	34.38	0.0153	2283

These developments, suggesting a clear shift towards deal-making rather than escalating trade wars, unleashed a wave of buying across Wall Street. The S&P 500 and Nasdaq Composite both surged to new all-time highs, while the Dow climbed towards the 45,000 milestone. The rally was broad-based, with small caps also participating strongly. The market’s “fear gauge,” the VIX, continued its steady decline, reflecting a near-total absence of immediate concern among investors. 

The positive trade news overshadowed a disappointing report on June Existing Home Sales, which missed expectations. The focus remained squarely on the improving trade picture and a strong start to the Q2 earnings season, where the vast majority of companies have so far beaten analyst expectations. With the immediate tariff threat seemingly neutralized, the market’s momentum remains firmly to the upside as investors await key earnings from tech giants Google and Tesla after the close.

Economic Data

The key economic report yesterday was June Existing Home Sales, which showed continued softness in the U.S. housing market. A heavy slate of economic data and central bank events are on tap for today, which could inject significant volatility. 

• Existing Home Sales (June): Fell -2.7% m/m to a 3.93 million unit annualized rate (below 4.00M consensus). Inventory rose to 4.7 months’ supply. The median home price hit a record high of $435,300, up +2.0% year-over-year.

Today’s Major U.S. Releases (Scheduled): 

• 8:30 AM ET / 12:30 PM GMT: Initial Jobless Claims (Weekly) 
• 8:30 AM ET / 12:30 PM GMT: Chicago Fed National Activity Index (June) 
• 9:45 AM ET / 1:45 PM GMT: S&P Global Flash PMIs (Manufacturing & Services) for July 

Major European Events (Today):

• European Central Bank (ECB) Monetary Policy Statement & Rate Decision (No change expected) 
• ECB Press Conference 
• Eurozone & UK Flash PMIs for July (Released earlier, generally showing modest improvement) 
• Central Bank Speakers: SNB Chairman Schlegel Speech

Commodities, Currencies, and Treasuries 

Gold prices pulled back sharply as the significant de-escalation in trade tensions diminished safe-haven demand. August futures fell $46.10 (-1.34%) to settle at $3,397.60 per ounce. Crude oil prices finished nearly flat, with WTI down just $0.06 at $65.25/bbl. The market weighed the positive demand implications of the trade deals against a mixed weekly EIA inventory report, which showed a draw in crude and gasoline but a build in distillates. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-0.06	USD/bbl	65.25
Brent	-0.08	USD/bbl	68.51
Gold	-46.1	USD/oz	3397.6
EUR/USD	0.0008	USD	1.176
USD/JPY	-0.05	JPY	146.57
10-Year Note	0.054	%	0.0439

The U.S. dollar was mixed, strengthening against the Euro and Swiss Franc but weakening against the Japanese Yen amid political uncertainty in Japan. Treasury yields rose on the strong risk-on sentiment and reduced need for safe-haven assets, with the 10-year yield climbing over 5 basis points to 4.39%. A 20-year bond auction was well-received, showing strong demand. Bitcoin and other cryptocurrencies saw some profit-taking after hitting recent record highs.

Looking Ahead 

The market’s reaction to the ECB press conference and the slew of U.S. economic data will set the tone for the remainder of the session. Investors will be looking for confirmation that the U.S. economy remains resilient. While the immediate trade crisis with Japan and the EU appears to have been averted, any new details or potential friction points in the negotiations will continue to be closely watched. The market’s digestion of last night’s tech earnings will also be a key factor for sector leadership today.