Wall Street poised for higher open as US-Japan trade deal lifts sentiment
The pact will slash tariffs on the Japanese auto sector to 15% from 27.5%, with duties on other goods also dropping to 15% from 25%.
At 8:24 a.m. ET, S&P 500 E-minis were up 22.5 points, or 0.35%, Nasdaq 100 E-minis were up 17.75 points, or 0.08%, and Dow E-minis were up 233 points, or 0.52%.
Futures tracking the domestically focused Russell 2000 small-cap index (.RUT), opens new tab rose 0.9%.
Representatives from Washington and the European Union were headed into negotiations, hoping to secure a breakthrough deal. At the same time, the European Commission declared plans to submit counter-tariffs on 93 billion euros ($109 billion) of U.S. goods for approval to EU members.
"The United States has been working very hard on trying to get a lot of trade deals in time before the August 1st deadline, and it seems like they're starting to get some momentum. So I do think this is a very positive sign," said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Meanwhile, the S&P 500 notched its eighth record close in a month on Tuesday, buoyed by easing trade tensions, a resilient U.S. economy, and upbeat second-quarter earnings.
The Dow climbed 0.4%, now within striking distance of its all-time high, while the Nasdaq slipped as declines in Meta and Microsoft weighed on the tech-heavy index.
Investors are now laser-focused on earnings from the "Magnificent Seven" — the market's star performers who have powered stocks to record highs.
Tesla (TSLA.O), opens new tab and Alphabet (GOOGL.O), opens new tab are set to report after the bell on Wednesday. With AI optimism running high and valuations stretched, expectations for these tech giants are sky-high, leaving little margin for disappointment. Both the stocks eased about 0.3% premarket.
In earnings-focused moves, Texas Instruments (TXN.O), opens new tab tumbled 9.9% after its quarterly profit forecast failed to impress investors, as it pointed to weaker-than-expected demand for its analog chips from some customers and underscored tariff-related uncertainty.
The earnings also weighed on its peer analog chipmakers, with NXP Semiconductors (NXPI.O), opens new tab, Analog Devices (ADI.O), opens new tab and ON Semiconductor (ON.O), opens new tab falling between 3.1% and 5.4%.
Automaker General Motors (GM.N), opens new tab also became a casualty of the trade war on Tuesday when it said Trump's tariffs took a $1.1 billion hit on its quarterly earnings, sending its shares down more than 8%.
Toymaker Hasbro (HAS.O), opens new tab rose 0.5% after raising its annual revenue forecast, while AT&T (T.N), opens new tab slipped 3.4% despite beating quarterly profit estimates.
In economic data, existing home sales numbers for June are due on the day. Thursday's weekly jobless claims numbers and S&P Global's flash PMI data will be closely assessed to gauge economic health in the wake of tariff uncertainties.
Following a mixed set of economic data last week, traders have ruled out an interest rate cut by the Federal Reserve next week. Odds for a September reduction stand at 56%, according to the CME FedWatch tool.
The Fed's July meeting will follow on the heels of mounting concerns about its independence amid political interference and President Trump's persistent attacks on Chair Jerome Powell for his reluctance to cut rates.
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