US-EU Trade Deal Impact on Stocks

Introduction

The US stocks showed mixed results on Monday, with the S&P 500 reaching a new record high for the sixth consecutive day. This came after the announcement of a framework for a US-EU trade deal by President Donald Trump and President Ursula von der Leyen.

Stock Market Performance

The Dow Jones Industrial Average fell 0.14%, the S&P 500 edged higher by 0.02%, and the Nasdaq Composite gained 0.33%. The S&P 500 and Nasdaq hit record highs, but the Dow is yet to achieve a new record since early December.

Impact of the Trade Deal

Initially, markets cheered the US-EU trade deal as it avoided a more drastic trade war. However, stocks' momentum stalled on Monday, putting a pause on a recent hot streak. The Dow had traded near record-high territory earlier but pulled back.

Key Points

• A 15% tariff on US imports of EU goods was announced, which is lower than Trump’s previous threat of a 30% tariff.
• The EU-US trade deal has removed a significant layer of uncertainty from markets, according to Paul Stanley, chief investment officer at Granite Bay Wealth Management.
• While the trade deal has resolved fears about a potential transatlantic trade war, the 15% tariffs are still expected to drag on economic growth.

European Markets

Stocks in Europe turned sour after initially jumping higher. Europe’s benchmark Stoxx 600 index dropped 0.2%, and Germany’s DAX index slid 1%. The US dollar index gained 1%.

Future Expectations

Investors are focusing on upcoming corporate earnings, particularly from tech giants like Meta, Microsoft, Amazon, and Apple. Key economic data, including the monthly jobs report and the Federal Reserve's decision on interest rates, will also be closely watched.