The Dow Jones Industrial Average jumped on Wednesday as investors cheered the trade agreement between the United States and Japan, raising hopes that the White House will reach more deals before the tariff deadline.
The Dow rallied over 500 points higher on Wednesday to settle at 45,010.29, bringing it within reach of its record high set back in December. The S&P 500 Index
The moves follow a second straight session of record gains for the S&P 500 as market participants continue to look for more room for the broader market to grow as the White House's Aug. 1 sweeping tariff deadline looms and mega-cap earnings are set to release in the coming days.
President Donald Trump said in a Truth Social post late Tuesday that the U.S. reached a "massive deal" with Japan, which included a 15% tariff on exports. The president also said the White House is meeting with trade officials from the European Union, with the Financial Times reporting Wednesday that the U.S. will impose a 15% duty on most goods, effectively decreasing Trump's previous tariff threat of 30% on the bloc starting Aug. 1.
Shares of Japanese and European automakers such as Honda Motor
UBS analyst Chisa Kobayashi, however, wrote in a note on Wednesday that the trade deal between the U.S. and Japan could harm the latter's economy.
"The 15% tariff will still likely lead to declines in exports and corporate earnings, and the resulting stagnation in capital investment and consumption will likely continue to exert downward pressure on the Japanese economy by about 0.4 percentage points year over year, in our view," Kobayashi wrote.
In domestic economic news, sales of existing U.S. homes fell by a more-than-expected 2.7% in June, the National Association of Realtors (NAR) reported Wednesday, to a seasonally adjusted rate of 3.93 million. The decline was backdropped by the median sales price reaching its highest level ever for the month of June, climbing 2% annually to $435,400, as spiking mortgage rates priced out many would-be buyers.
"Multiple years of undersupply are driving the record high home price. Home construction continues to lag population growth," said Lawrence Yun, chief economist at NAR, in a statement. "This is holding back first-time home buyers from entering the market."
Looking ahead, JPMorgan quantitative strategists led by Khuram Chaudhry echoed other bearish analysts on Wall Street Wednesday, warning that "investors should be on the lookout for a potential market rotation" as global equity prices reach all-time highs alongside "plentiful" consensus earnings per share downgrades.
"There appears to be an environment of bullish sentiment, speculations, and a growing air of complacency. Either sell-side analysts are about to start a new round of upward revisions or the market is at risk of suffering a period of increased volatility and drawdowns," the strategists wrote.
"The U.S. market is thriving on sectors like Technology and the 'Magnificent 7' stocks, fueled by the Generative AI trend, yet cracks and volatility are increasingly likely in H2," they continued, adding that "something has to give!"
That view will be put to the test as Alphabet and Tesla deliver their second-quarter earnings results after market close on Wednesday. Other notable reports set to impact Thursday's session include IBM
