The S&P 500 rose for a third straight day, as investors hoped for progress in trade talks between the U.S. and China. The index closed up 0.55% at 6,038.81, nearing its all-time high. The Dow Jones Industrial Average added 105.11 points, or 0.25%, to end at 42,866.87, while the Nasdaq Composite gained 0.63% to settle at 19,714.99.
U.S. Commerce Secretary Howard Lutnick expressed optimism about the ongoing discussions in London, stating he hopes they will conclude by Tuesday night or Wednesday if needed. “I think the talks are going really, really well. We’re spending time, effort, and energy closely,” Lutnick told reporters.
Traders are closely watching for signs of a deal that could prevent new tariffs from being imposed. Both nations agreed last month to pursue negotiations, which was seen as a breakthrough after U.S. President Donald Trump had proposed broad and steep tariffs on imports. Stocks have rallied in June due to optimism about global trade discussions and strong corporate earnings.
Gains have also been driven by a revival in tech stocks following recent AI announcements. “Technically, shares have been on a nice run, eclipsing key levels to get back on track. The rally looks like many other technology names trying to return to old highs,” said Jay Woods, chief global strategist of Freedom Capital Markets.
“Even potential weakness seems to have a soft landing spot and offers a good entry point from a risk/reward perspective,” Woods added.
Trade talks spark stock rally
However, some investors worry that current tariffs could drive inflation higher and impact equities.
“While the overall picture isn’t completely clear, enforceable tariffs exist,” said Mark Malek, chief investment officer of Siebert Financial. “The Fed is concerned that the real inflationary effects have not yet emerged. Tariff-driven inflation could initially affect aggregates such as autos, apparel, and foods.”
HSBC anticipates that global equities will experience an upward movement over the next three months, with U.S. equities potentially rising to catch up with international markets.
However, the outlook becomes challenging afterward, according to strategist Alastair Pinder. Morgan Stanley believes investors are underappreciating Duolingo’s potential, despite its nearly 54% year-to-date rally. Analyst Nathan Feather reiterated his overweight rating on the stock with a $515 price target.
D.A. Davidson maintains a critical view of CoreWeave following the issuance of a new financing structure. Analyst Gil Luria reiterated an underperform rating and $36 price target on the stock. An ETF tracking home construction names jumped more than 2% in midday trading, potentially marking its best day in around a month.
Stocks like Lennar and DR Horton led the fund higher, each rising more than 5%. Wells Fargo warns that Tesla stock could come under pressure due to weak fundamentals in its core auto business, citing a drop in May global deliveries and ongoing price cuts. The bank has assigned an “underweight” rating and a $120 price target to Tesla.
OpenAI has finalized a deal with Google’s cloud service to provide additional computing capacity for its AI infrastructure.
