Stocks in the United States continued their upward trend on Wednesday after reports emerged about a potential trade agreement between the United States and European Union which would establish a 15% tariff system for European imports similar to the Tokyo deal.
The Financial Times reported that the proposed agreement would grant tariff exemptions to aircraft along with spirits and medical devices between the two parties. The market reacted positively to this news because it indicated reduced trade tensions which would occur before President Donald Trump’s August 1 deadline.
The S&P 500 index increased by 0.49% while the Nasdaq Composite index gained 0.21%. The Dow Jones Industrial Average increased by nearly 418 points which brought it close to establishing a new record. The CBOE Volatility Index recorded its lowest level in five months which measured market volatility.
The announcement about the U.S.-Japan trade pact on Tuesday supported the current momentum by lowering auto tariffs to 15% and establishing a $550 billion investment fund. The Philippines and the United States reached a separate agreement which resulted in minimal tariff reductions.
Business investment and consumer confidence have suffered from economic uncertainty throughout the past year yet investors remain optimistic about Trump administration deals with major trading partners.
