Dow Jumps on Trump Trade Deal; Nvidia Surges on Musk's AI Startup (Live)
Market Gains and Key Stock Movements
Wall Street saw a positive day on Wednesday as major stock indexes, including the Dow Jones Industrial Average, rose in response to President Donald Trump's announcement of a trade deal with Japan. Investors were particularly optimistic about the potential economic implications of the agreement. Among the notable performers was Nvidia (NVDA), which saw its stock price climb following news related to Elon Musk's xAI startup.
The Dow Jones Industrial Average gained 0.2%, while the S&P 500 also moved up by 0.2%. However, the Nasdaq Composite slipped into negative territory, showing some weakness in tech stocks. In contrast, small-cap stocks on the Russell 2000 climbed 0.9%, indicating broad-based market strength.
Volume on the Nasdaq was higher compared to the previous day, while the New York Stock Exchange saw lower trading activity. This mixed volume pattern reflects varying investor sentiment across different market segments.
Nvidia's Rise Amid Earnings Outlook
Nvidia's stock rose more than 1% as investors awaited the upcoming earnings report from Alphabet (GOOGL). The company's performance was further supported by a Wall Street Journal report that revealed Tesla CEO Elon Musk’s xAI startup is seeking up to $12 billion to purchase Nvidia chips for training its Grok chatbot. This development has sparked interest in Nvidia's role in the AI sector.
On the other hand, Texas Instruments (TXN) faced significant pressure after issuing a weaker-than-expected outlook for the current quarter. Despite strong results for the June quarter, with sales of $4.4 billion and earnings of $1.41 per share, the company guided for midpoint earnings of $1.48 per share for the September quarter, which fell short of analysts’ expectations. Shares of Texas Instruments dropped 12%, falling below its 50-day moving average and triggering the 7% sell rule.
Other Notable Stock Movements
Enphase (ENPH) also experienced a setback as it failed to break through its 50-day moving average. The solar company reported earnings of 69 cents per share on sales of $363.2 million, but its third-quarter sales guidance of $350 million missed estimates of $364.3 million. Enphase also warned that tariffs could negatively impact its gross margins.
SAP (SAP) saw its stock fall below the 50-day moving average due to concerns over tariffs and a weak U.S. dollar. Although the company posted earnings of $1.76 per share, which exceeded estimates, its sales of $10.57 billion met expectations. The stock's decline highlights ongoing challenges in the enterprise software sector.
Bond Yields and Oil Prices
Bond yields rose as oil prices declined. The 10-year Treasury yield increased to 4.38%, reflecting growing investor confidence in the economy. Meanwhile, West Texas Intermediate crude oil futures fell to around $65.20 per barrel, signaling reduced demand or increased supply in the energy markets.
Key Performers in the Dow Jones Index
Within the Dow Jones Industrial Average, JPMorgan Chase (JPM), Merck (MRK), and Nvidia were among the top gainers. JPMorgan stock climbed 0.7%, nearing a new high, while Merck added 0.9%. Nvidia's premarket rally of 1.1% showed signs of recovery after a 2.5% drop on Tuesday.
Earnings Reports and Market Expectations
Alphabet and Tesla are set to release their second-quarter earnings reports after the market close. Alphabet's stock slipped 0.3% in premarket trading, threatening a 10-day winning streak. Tesla, meanwhile, lost 0.2% in morning action but has recently regained its 50-day moving average, building a base with a buy point of 367.71.
Earnings Movers and Market Reactions
AT&T stock fell more than 3% in premarket trading despite better-than-expected results for the second quarter. Investors may have been disappointed by the lack of an outlook boost, especially after Verizon Communications raised its forecast earlier in the week. Other key earnings movers included Boston Scientific (BSX), GE Vernova (GEV), and General Dynamics (GD), with shares of these companies rising by 2%, 4%, and 3%, respectively.
Trade Deal with Japan
President Donald Trump announced a "massive" trade deal with Japan late Tuesday on Truth Social. Under the agreement, the U.S. will impose a 15% tariff on Japanese goods, which is less than the previously threatened 25% tariff. The new tariff applies to the auto sector, with Prime Minister Shigeru Ishiba stating that 80% of Japan's trade surplus with the U.S. comes from autos and parts. Trump claimed that Japan will take steps to open its market to U.S. autos, rice, and other products. Additionally, Japan will invest $550 billion in the U.S. and purchase 100 Boeing jets. Boeing stock rose 0.6% in premarket trading.