Stocks were mostly higher on Wednesday as investors widely cheered the announced trade deal between the United States and Vietnam. However, much of the session's optimism was shaded by a surprise decline in private payrolls late month, signaling further labor market weakness heading into the second half of the year.
The S&P 500 Index (NYSE: SPY) climbed to another fresh all-time high on Wednesday, adding nearly 0.5% to settle at 6,227.42. Meanwhile, the tech-heavy Nasdaq Composite (NASDAQ: QQQ) advanced over 0.8% to its own record close of 20,393.13 on renewed strength for Tesla (NASDAQ: TSLA) shares and the Dow Jones Industrial Average (NYSE: DIA) slipped over 10 points.
President Donald Trump announce in a post on his social network Truth Social that the U.S. has reached a deal with Vietnam that includes a 20% tariff on all imports. Shares of Dow component Nike (NYSE: NKE), which manufacturers nearly a quarter of its inventory in Vietnam, rose over 4% on the news.
"The Terms are that Vietnam will pay the United States a 20% Tariff on any and all goods sent into our Territory, and a 40% Tariff on any Transshipping," Trump wrote. "In return, Vietnam will do something that they have never done before, give the United States of America TOTAL ACCESS to their Markets for Trade."
The new trade deal helped boost a broader market that was looking for direction ahead of the Labor Department's "official" jobs report for June due out Thursday morning before the holiday-extended weekend.
On Wednesday, private payrolls posted an unexpected decline in June, payroll data processor ADP reported, offering the latest sign that the U.S. labor market is softening in response to the evolving macroeconomic landscape. The private sector lost 33,000 positions last month, marking its first monthly decline since March 2023. Dow Jones economists had expected payrolls to grow by 100,000, and June's print more than reversed May's gains of 29,000.
"Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing working led to job losses last month," said Nela Richardson, chief economist at ADP, in a statement. "Still, the slowdown in hiring has yet to disrupt pay growth."
The latest labor market data is set to shape the Federal Reserve's timeline when it comes to interest rate cuts. Futures traders currently do not expect the central bank to begin slashing rates until their September meeting, according to CME Group's FedWatch tool.
That outlook comes as Fed Chair Jerome Powell said in commentary earlier this week that policymakers would likely have reduced rates if not for Trump's tariffs.
"In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence," Powell said at forum hosted by the European Central Bank in Sintra, Portugal on Tuesday.