Key Takeaways
- The Dow Jones Industrial Average surged, unofficially closing up 482.92 points, or 1.09%, at 44,985.36, driven by optimism surrounding international trade agreements.
- Significant progress was reported on potential U.S.-EU trade deals, with European shares gaining on hopes of a 15% tariff agreement, while oil prices held steady near $65 despite mixed inventory signals.
- President Trump's new AI action plan aims to scale back FTC investigations that could hinder innovation, providing a major boost for tech giants like Microsoft (MSFT) under regulatory scrutiny.
- The U.S. and Japan solidified a strategic trade and investment agreement, including Japan's commitment to purchase 100 Boeing aircraft (BA) and $8 billion in U.S. goods.
- Treasury's Bessent indicated the possibility of 1-2 Federal Reserve rate cuts this year, while Goldman Sachs (GS) and Bank of New York Mellon (BK) are innovating by bringing crypto-underpinning technology to money-market funds.
U.S. equities closed higher today, with the Dow Jones Industrial Average experiencing a notable rise of 482.92 points, or 1.09%, to reach 44,985.36 at the unofficial close. This market rally was largely fueled by growing optimism surrounding international trade negotiations and a new U.S. AI policy.
Trade Deals Bolster Global Markets
Trade developments were a major catalyst for market sentiment. The European Union is reportedly moving towards a 15% tariff deal with the United States, with EU diplomats confirming progress. This positive outlook propelled European shares to two-week highs, particularly benefiting automakers. Despite concerns over potential EU counter-tariffs on $109 billion worth of U.S. goods, the overall sentiment remains hopeful for a broader trade resolution.
Concurrently, the U.S. and Japan formalized a strategic trade and investment agreement. As part of this deal, Japan has committed to purchasing 100 Boeing aircraft (BA) and $8 billion in U.S. agricultural products and other goods, including corn, soybeans, fertilizers, bioethanol, and sustainable aviation fuel. Japan also agreed to immediately boost its imports of U.S. rice by 75% within its existing tariff-free quota. The two nations are also exploring a new off-take agreement for Alaskan Liquefied Natural Gas (LNG) to strengthen their energy partnership.
AI Policy and Tech Sector Impact
President Trump's new AI action plan is set to significantly impact the technology sector. The plan urges the Federal Trade Commission (FTC) to scale back investigations that could hinder innovation, a move seen as a major boost for tech giants like Microsoft (MSFT) that are currently under regulatory scrutiny. While critics caution that key issues such as data privacy and cloud dominance still require oversight, the administration's stance signals a more permissive regulatory environment for AI development. However, the White House also indicated that Elon Musk's xAI will not receive federal government contracts.
Energy and Corporate Moves
Oil prices remained steady near $65 a barrel, as optimism over the potential U.S.-EU trade deals helped to offset mixed inventory signals, including a major stock build at Cushing, Oklahoma. Market volatility is expected to persist amid rising distillate supplies and ongoing tariff-driven uncertainty.
In corporate news, Chevron (CVX) announced the elimination of 575 positions following its $53 billion acquisition of Hess (HES). Meanwhile, BP's Castrol (BP) unit has received a bid from One Rock Capital, with Canada's CPPIB reportedly interested in acquiring a minority stake, as most other suitors have withdrawn. In the mining sector, Rio Tinto (RIO) and Chile’s ENAMI signed a binding agreement for the Salares Altoandinos Lithium Project. Rio Tinto will acquire a 51% stake and invest up to $425 million, with the deal anticipated to close in the first half of 2026.
Monetary Policy and Financial Innovation
Treasury's Bessent stated that he sees 1-2 Federal Reserve rate cuts as possible this year, noting his frequent meetings with Fed Chair Jerome Powell. This commentary comes as markets continue to assess the future trajectory of interest rates.
In financial innovation, Goldman Sachs (GS) and Bank of New York Mellon (BK) are pioneering the integration of blockchain technology into traditional finance by bringing the technology that underpins crypto to money-market funds. This development aims to enhance efficiency and transparency in the investing stalwart.
Separately, the Federal Aviation Administration (FAA) announced an extension of reduced minimum flight requirements at congested New York City airports through October 2026. On the geopolitical front, Russia and Ukraine have agreed to continue talks, though their positions remain "far apart." Russia's negotiator, Vladimir Medinsky, stated that any potential meeting between state leaders would be for signing finalized agreements, not for further discussions. Exchanges of soldiers' bodies and prisoner swaps have also been reported.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.