Markets Rally on Hopes for U.S.-EU Trade Agreement
U.S. stocks ended Friday with record closes, fueled by growing optimism that the United States and European Union are nearing a trade deal. Investors welcomed news that European Commission President Ursula von der Leyen will meet President Donald Trump in Scotland, a sign that a framework agreement could be imminent. Trump placed the odds of a deal at “50-50,” but market participants appeared more confident.
The S&P 500 gained 0.40% to finish at 6,388.64, while the Nasdaq rose 0.24% to 21,108.32. The Dow Jones Industrial Average added 0.47%, closing at 44,901.92. Materials and industrials led sector gains, with nine of the eleven S&P sectors in the green. The S&P 500 recorded a rare “perfect week” of closing highs, a streak last seen in late 2021.
Earnings and Economic Signals Drive Momentum
Deckers Outdoor jumped 11% after a strong quarterly report driven by robust global demand for its Hoka and UGG brands. Meanwhile, Intel dropped 8.5% after issuing disappointing guidance and revealing plans for job cuts. Other major movers included Charter Communications, down 18% due to broadband subscriber losses, and Centene, up 6.1% following a profitability forecast for its healthcare segments.
Traders are watching the Federal Reserve closely as inflation dynamics evolve. The central bank is widely expected to hold interest rates steady next week. However, Trump has renewed his calls for cuts, suggesting that Chair Jerome Powell might be preparing to ease. According to CME’s FedWatch tool, markets now price in a 60% chance of a rate cut by September.
Tech Giants to Report Amid Strong Earnings Season
Second-quarter earnings growth for S&P 500 firms is projected to hit 7.7% year over year, led primarily by the tech sector. Investors are awaiting reports from Microsoft, Apple, Amazon and Meta next week. These mega-cap stocks could determine whether markets maintain their bullish trajectory.
Paramount Global slipped 1.6% despite regulatory approval for its $8.4 billion merger with Skydance Media, while broader volume on U.S. exchanges was light, totaling 17.7 billion shares—slightly below the 20-day average.
Market Breadth and Sentiment Remain Positive
Market breadth was strong, with advancing stocks outpacing decliners by a two-to-one margin in the S&P 500. The index posted 45 new highs against 6 new lows, while the Nasdaq recorded 68 new highs and 54 lows. Analysts continue to monitor tariff developments and macro data for potential risks, but for now, investors are betting on further trade progress and resilient corporate earnings.
