U.S. stock markets surged Tuesday as investors cheered news of a landmark trade deal between the United States and Japan, while bracing for key earnings from tech giants Tesla and Alphabet after the bell.
The Dow Jones Industrial Average climbed over 1.1%, the S&P 500 added 0.7%, and the Nasdaq Composite advanced 0.5%, with the broader market buoyed by a wave of optimism over improved global trade conditions.
At the center of the rally was a U.S.–Japan trade agreement, which will significantly reduce tariffs on Japanese automobiles and consumer goods. The deal, valued at an estimated $500 billion to $550 billion, includes lowered duties on vehicles cutting U.S. auto tariffs from 27.5% to 15% and provides expanded access for U.S. agricultural and tech exports.
“This is a major win for global trade stability,” said one analyst, noting that the agreement appears to be part of a broader U.S. strategy, with simultaneous negotiations underway with the European Union and the Philippines.
The market also drew strength from falling volatility. The CBOE Volatility Index (VIX) slid to its lowest level in nearly two months, signaling a surge in investor confidence.
Still, not all sectors participated equally. Texas Instruments (TXN) fell sharply down more than 11% after delivering a weaker-than-expected Q3 forecast, which in turn weighed on other analog semiconductor names.
Meanwhile, GE Vernova delivered a bright spot in earnings season, surging 13.5% after beating Q2 expectations and raising its full-year guidance.
Investors are also closely watching the highly anticipated Q2 results from Tesla (TSLA) and Alphabet (GOOGL), due after the market close. These reports could set the tone for tech stocks in the days ahead.
Retail traders made their presence felt as well, pushing so-called “meme stocks” like GoPro, Krispy Kreme, Kohl’s, and Opendoor into double-digit intraday gains, reminiscent of previous short-squeeze waves.
Outlook:
With global trade talks improving and strong corporate earnings in focus, investors are regaining their appetite for risk. But with big tech earnings looming, markets remain cautious, and volatility could return quickly depending on tonight’s results.