US stock futures popped on Wednesday after the US struck a trade deal with Japan, lifting hopes for further tariff pacts as Wall Street got ready for Tesla (TSLA) and Alphabet (GOOGL, GOOG) earnings.
Dow Jones Industrial Average (YM=F) rose roughly 0.5%, while S&P 500 futures (ES=F) moved up 0.4%. Contracts on the tech-heavy Nasdaq 100 (NQ=F) nudged up 0.2%, following a mixed day for stocks.
The new pact places a 15% tariff on imports from Japan, President Trump said — a step down from the threatened 25% duties set to hit next week. For its part, Tokyo will make $550 billion in US investment. “It’s a great deal for everybody,” Trump said late Tuesday.
The major-partner breakthrough lifted optimism that more trade deals will be sealed before Aug. 1, when Trump’s sweeping tariffs kick in, even as negotiations with the European Union, India, and other large partners have dragged of late. Economists believe that if tariffs then average out at 15%, that would be manageable for the global economy, limiting damage.
The deal’s confidence boost for markets after months of tariff uncertainty is likely to fuel this week’s record-setting run in the S&P 500 (^GSPC), which eked out another all-time closing high on Tuesday.
But the rally faces a big test in Google-parent Alphabet and Tesla’s earnings due after the bell, the first of the “Magnificent Seven” to report.
Tesla CEO Elon Musk’s rocky relationship with Trump is looming large over the EV maker’s earnings. With its stock down nearly 18% year-to-date, investors are watching for updates on the company’s core auto business and its robotaxi rollout.
With Alphabet, investors are looking for signs that AI investments are starting to pay off as the company pours billions into the technology. A federal judge’s decision that could force the company to sell Google Chrome will also be in focus.
Meanwhile, investors will scour Wednesday’s flurry of quarterly earnings for more insight into how Corporate America is coping with tariffs, after Texas Instruments’ (TXN) soft guidance fed fears. Highlights on the docket include Chipotle (CMG), AT&T (T), IBM (IBM), and Alaska Air (ALK).