US Stocks Rise After Trade Agreement Announcement
The US stocks rose on Monday and the Dow was ready to reach its first record high of the year when investors welcomed the announcement of a trade agreement between Washington and Brussels.
Trade Agreement Details
The shares opened higher on Monday morning after President Donald Trump and President of the European Commission Ursula von der Leyen announced a framework for a US-EU trade agreement on Sunday. The Dow rose by 38 points or 0.08%. The wider S&P 500 rose 0.17%. The tech-driven Nasdaq composite increased by 0.4%.
Market Reaction
The Dow acted near record areas and tried to win 0.39% to outperform its previous intraday record of 45,073.63. The Blue Chip Index must end the day with a win of around 115 points or 0.25% to close with a high record, which would be the first year. While the S&P 500 and the Nasdaq have collected numerous record highs this month, the Dow is still looking for its first record high since the beginning of December.
Investor Expectations
Trump and von der Leyen met in Scotland and announced the deal, which included a tariff of 15% for US imports from EU goods. The announcement corresponded to the expectations of investors and was better considered by the markets as Trump’s earlier threat of a 30% tariff. "The EU-US trade agreement eliminates a significant layer of uncertainty for markets," said Paul Stanley, Chief Investment Officer at Granite Bay Wealth Management.
Market Analysis
"The uncertainty should probably remain for the foreseeable future," said Jack Allen-Reynolds, deputy chief euro zone economist of Capital Economics. Investors are preparing for a full week for markets. In addition to the closely observed monthly job report, there are a number of company results, including the results for four of the seven companies in the so-called big tech shares: Meta and Microsoft on Wednesday and then on Thursday Amazon and Apple.
Upcoming Events
The Federal Reserve will make a decision on interest rates on Wednesday. Global investors will also keep an eye on the Bank of Canada and announce a decision on interest rates on the same day. As well as the Bank of Japan, which is to make an announcement on interest rates on Thursday. Data from the trade department that are due on Wednesday will show the initial reading of the growth of the economy in the second quarter.
Economic Growth
The US economy in the first quarter has been committed for the first time in years. Investors at the beginning of this year were concerned about the prospects that the US economy got into a recession due to the effects of tariffs. A recession is often defined as two consecutive quarters of business contracts. Representatives from Washington and Beijing meet in Sweden this week to discuss the trade.
Future Outlook
Ed Yardeni, President of Yardeni Research, said in an indication that he would expect that economic data and profits, regardless of trade agreements, make a boost for shares. "The financial markets expected the latest deal, and the reaction to this is probably relatively steamed this week," said Yardeni. "The series of labor market indicators this week will become more important, which culminates on Friday with the publication of the labor report in July." Yardeni said he thinks the job market is going well and he expects shares to continue to rise if the big tech companies exceed the results according to expectations.
