S&P 500 Gains After Trump Touts Trade Deal With UK: Markets Wrap

(Bloomberg) — A sense of cautious optimism prevailed on Wall Street, with stocks up and bonds down amid hopes that a US-UK tariff pact could help ease tensions and serve as a blueprint for how President Donald Trump’s negotiations with other countries are evolving.

Just a day after the Federal Reserve signaled it doesn’t need to come to the rescue with rate cuts as the economy remains solid, traders refocused on what’s essentially driving the market these days – expectations that America’s trade war will de-escalate. The S&P 500 rose for a second straight day, but traded off session highs. As the bid for safety ebbed, Treasuries, gold and haven currencies lost steam.

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*US TO CUT TARIFFS ON UK-MADE CARS TO 10%, TELEGRAPH REPORTS

Trump said the US has secured what he described as a comprehensive trade agreement with the UK to be announced Thursday. The arrangement keeps in place a 10% baseline tariff, according to people familiar with it. The 10% level is seen by administration officials as a minimum floor on trading partners, essential to raising revenue in the US and deterring trade cheating.

“A key question in the pending US-UK ‘deal’ will be whether the universal reciprocal tariff of 10% is abolished, or whether it stays as a floor,” said Thierry Wizman at Macquarie. “Abolishment of the reciprocal tariff, even as a contingency, could set a positive precedent for other deals between the US and its allies. It would be ‘good news’.

The S&P 500 rose 0.5%. The Nasdaq 100 gained 0.8%. The Dow Jones Industrial Average added 0.7%.

The yield on 10-year Treasuries advanced five basis points to 4.32%. The Bloomberg Dollar Spot Index rose 0.2%.

“As we get the details of this trade deal today, and find out how much progress the US and China are making towards the most important trade deal this weekend, it should give investors some more clarity about how much of an impact the trade issue will have on the US and global economy going forward,” said Matt Maley at Miller Tabak + Co.

Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will travel this week to Switzerland for trade talks with China led by Vice Premier He Lifeng, seeking to de-escalate a tariff standoff that has threatened to hammer both economies. The travel was announced in statements Tuesday from the Chinese and US governments. 

“The weekend meeting between the US and China feels more like a diplomatic icebreaker than a breakthrough moment,” said Fawad Razaqzada at City Index and Forex.com. “We could be in for a long, drawn-out negotiation season, which may limit the upside potential for risk assets.”

Dan Ivascyn at Pacific Investment Management Co. said tariffs could lead to a more “stagflationary” scenario with higher price levels amid a potentially slowing economy, the Financial Times reported. Pimco has made small increases to its US government-debt exposure over the previous two months, focusing on shorter-dated maturities.

Corporate Highlights:

• Arm Holdings Plc gave a disappointing sales forecast for the current quarter, stoking concerns about a tariff-fueled slowdown for the chip industry.
• Apple Inc. made an unusual pitch in its bid to save a lucrative search partnership with Alphabet Inc.’s Google, saying that the deal might not be necessary in the long run and that even the iPhone may fall out of use.
• Peloton Interactive Inc. reported a 13% decline in revenue last quarter, marking the third straight year-over-year decline in sales.
• Shopify Inc. projected slowing profit growth in the current quarter, with executives pledging to keep spending to boost sales growth.
• Match Group Inc. is cutting one in five managers as part of a 13% workforce reduction, the latest effort by its new chief executive officer to deliver a turnaround at the dating app company.
• Carvana Co. doubled its profits in the first quarter with record vehicle volume and a substantial gain in loan sales.
• AppLovin Corp. agreed to sell its video-games unit to London-based Tripledot Studios to focus on its advertising technology business.
• Coinbase Global Inc. said it is acquiring Deribit, the world’s largest exchange for Bitcoin and Ether options, for $2.9 billion as the biggest US crypto exchange makes a push into the derivatives market.
• Krispy Kreme Inc. said it will no longer pay quarterly cash dividends in order to pay down its debt and focus on growth.
• Kenvue Inc. maintained its sales expectations for the year while lowering its profitability target as tariffs raise costs.
• Molson Coors Beverage Co. lowered its full-year guidance as the challenging consumer environment in the US drives shoppers away from the company’s products.
• A.P. Moller-Maersk A/S, the Danish container giant, lowered its forecast for the global transport market rattled by Donald Trump’s trade war.
• Handbag maker Tapestry Inc. raised its annual outlook again, shrugging off broader concerns about worsening consumer sentiment and the trade war.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.5% as of 10:34 a.m. New York time
• The Nasdaq 100 rose 0.8%
• The Dow Jones Industrial Average rose 0.7%
• The Stoxx Europe 600 rose 0.5%
• The MSCI World Index rose 0.4%
• Bloomberg Magnificent 7 Total Return Index rose 0.9%
• The Russell 2000 Index rose 1.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro was little changed at $1.1294
• The British pound rose 0.2% to $1.3323
• The Japanese yen fell 0.7% to 144.85 per dollar

Cryptocurrencies

• Bitcoin rose 3.1% to $99,783.92
• Ether rose 11% to $1,992.12

Bonds

• The yield on 10-year Treasuries advanced five basis points to 4.32%
• Germany’s 10-year yield advanced four basis points to 2.51%
• Britain’s 10-year yield advanced four basis points to 4.50%

Commodities

• West Texas Intermediate crude rose 2.7% to $59.62 a barrel
• Spot gold fell 0.3% to $3,354.34 an ounce

–With assistance from Sujata Rao and John Viljoen.

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