Dow Falls 0.10% as S&P, Nasdaq Rise on EU Trade Deal, U.S.-China Talks Weigh

The U.S. stock market exhibited divergent performances on July 28, 2025, as investors grappled with the implications of a recently finalized U.S.-EU trade deal and looming uncertainties in U.S.-China negotiations. The Dow Jones Industrial Average fell 0.10%, while the S&P 500 edged closer to record highs, up 0.03%, and the tech-heavy Nasdaq Composite rose 0.29%. The mixed outcomes reflected a delicate balance between optimism over reduced transatlantic trade tensions and concerns about potential escalations in U.S.-China relations [2].

The U.S.-EU agreement, which imposed a 15% baseline tariff on EU goods entering the American market while allowing most U.S. goods to enter the EU duty-free, initially spurred market optimism. The deal, described by some as a “submission” by France, avoided a costly trade war but is expected to disproportionately impact EU automakers and pharmaceutical companies, which face reduced export margins [1]. Despite these sector-specific challenges, the agreement bolstered U.S. liquefied natural gas (LNG) producers and signaled a temporary easing of transatlantic trade friction [3].

However, attention quickly shifted to the U.S.-China trade talks, with an August 1 deadline for a resolution fast approaching. Analysts noted that markets remain cautiously positioned, with the S&P 500’s near-record levels and the Dow’s modest decline underscoring the uncertainty. A failure to reach an agreement could trigger a return to punitive tariffs, potentially disrupting global trade flows and weighing on equity markets [2]. Reports indicated that both sides are discussing a potential 90-day extension, with de-escalating rhetoric and tentative signals of a “more balanced” deal offering a glimmer of hope [1].

The S&P 500’s resilience, closing at a five-week high, was driven by megacap stocks, which continued to attract investor attention despite broader market volatility [4]. Oppenheimer analysts projected a potential 20% gain for the index in 2025 if trade tensions with China eased, though this forecast hinges on the success of ongoing negotiations [1]. Meanwhile, the Nasdaq’s outperformance highlighted the tech sector’s role as a counterbalance to economic concerns, while the euro’s two-month low against the dollar reflected trade-related optimism for the U.S. currency [5].

Futures markets signaled cautious optimism, with the S&P 500 gaining 0.3% in pre-market trading as traders priced in potential Federal Reserve easing [6]. Treasury yields held steady following recent debt sales, indicating a preference for equity exposure over bond safety amid geopolitical risks [7]. Investors remained closely monitoring developments in U.S.-China talks, with no immediate resolution in sight. Analysts emphasized that markets would likely remain in a “wait-and-see” mode until clarity emerges on both bilateral negotiations and potential regulatory shifts in Beijing [2].

The interplay between trade developments and market sentiment underscored the fragility of global economic stability. While the EU deal provided short-term relief, the larger challenge of aligning U.S. and Chinese trade policies loomed as a critical factor for equity performance. With key indices fluctuating between gains and losses, the market’s focus on geopolitical outcomes highlighted the extent to which trade dynamics continue to shape investor behavior in an increasingly interconnected economy.

Source:

[1] [Dow, S&P 500, Nasdaq waver as Trump-EU trade deal kicks off huge week] [https://finance.yahoo.com/news/live/stock-market-today-dow-sp-500-nasdaq-waver-as-trump-eu-trade-deal-kicks-off-huge-week-165327703.html]

[2] [Dow Jones down, S&P near records as markets focus on U.S.-China talks] [https://crypto.news/dow-jones-down-sp-near-records-as-markets-focus-on-u-s-china-talks/]

[3] [Dow approaches record high after US-EU trade deal] [https://www.cnn.com/2025/07/28/investing/us-stock-market]

[4] [Stocks rise modestly, euro slides after US-EU trade deal] [https://www.reuters.com/world/china/global-markets-wrapup-6-2025-07-28/]

[5] [Stock Market Today: Euro Drops After Trump Strikes EU Deal] [https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-07-28-2025?gaa_at=eafs&gaa_n=ASWzDAgrE05e2e9e0_oZwYpqOEFNvxvl_V_awCOWlj0l9-p-SBdXqHtemq_e&gaa_sig=ZreiGY-20KBV7qRIOC3VZVwdZsPFlVXWtoJKo25g3YBNZvnQ37joz1PvReBEOhrm5eZSFf0yYDbFcO8szXVZyw%3D%3D&gaa_ts=6887c3d4]

[6] [U.S. stock market futures rise as Dow, S&P 500 and...] [https://www.msn.com/en-in/money/markets/u-s-stock-market-futures-rise-as-dow-s-p-500-and-nasdaq-gain-on-trump-eu-trade-deal-and-tesla-surge-ahead-of-crucial-fed-week/ar-AA1JqVNf]

[7] [Stock Market Today: Dow, S&P Live Updates for July 28] [https://www.bloomberg.com/news/articles/2025-07-27/us-futures-climb-after-trump-agrees-eu-tariff-deal-markets-wrap]