US and EU strike trade deal, boosting stock markets

On July 27, 2025, in the United States, stocks experienced an upward trend as the Dow approached its first record high of the year. The optimism stemmed from a recent trade deal framework announced by President Donald Trump and Ursula von der Leyen, the President of the European Commission. This announcement was well-received by the market, as it alleviated some concerns regarding the ongoing trade tensions between the two economic powers. The Dow Jones Industrial Average rose 38 points, equating to a 0.08% increase, while the broader S&P 500 saw a gain of 0.17%. Traders noted that the Dow was close to surpassing its previous intraday record of 45,073.63, which was set in December 2024. To set a new closing record, the Dow needed a gain of approximately 115 points, translating to a 0.25% increase. The broader market indicators were somewhat optimistic, especially as the S&P 500 and Nasdaq had recently achieved multiple record highs. However, it should be noted that the announced trade deal was seen more favorably by the markets compared to Trump’s earlier threats of imposing a substantial 30% tariff, which had previously raised concerns among investors. Experts indicated that while a 15% baseline tariff would remain in place, the reduction of uncertainty surrounding the trade deal could facilitate a stronger focus on economic fundamentals. Analysts expressed cautious optimism, pointing out that despite the positive news, uncertainty would likely persist in the aftermath. Market researchers noted that there may still be skepticism regarding the finality of the deal, with the potential for Trump to alter course post-announcement. Following this trade deal announcement, analysts and investors were preparing for a busy week, with a series of second-quarter earnings reports from prominent companies as well as decisions from global financial institutions such as the Bank of Canada and the Bank of Japan. Financial analysts were also anticipating important labor market indicators throughout the week as they prepare for the upcoming employment report, which is expected to be a pivotal factor in determining market direction. Many experts argue that the labor market's health will significantly influence stock performance in the upcoming weeks, irrespective of the trade deal results. Overall, the trade deal has been perceived positively by financial analysts who believe it will diminish uncertainty and create a more favorable market environment. However, cautious perspectives remain regarding the overall impact of uncertainty on long-term economic stability.