U.S. Stocks Surge 0.9% as S&P 500 Hits New High on U.S.-Vietnam Trade Deal

U.S. stocks surged on Wednesday, with the S&P 500 index hitting a new intraday high of 6,224.61, driven by the announcement of a trade deal between the United States and Vietnam. The Nasdaq Composite also saw gains, rising 0.9%, while the Dow Jones Industrial Average had a choppy day, ultimately closing down 11 points.

The trade deal, which includes a 20% tariff on imports from Vietnam, was announced by President Donald Trump. This development lifted investor sentiment, leading to a positive trading session in the afternoon. The S&P 500's intraday high was a testament to the market's response to the news, as tech stocks, in particular, showed strong performance. Several Magnificent Seven companies rebounded, with Nvidia rising 2.6%, Apple up 2.2%, and Tesla shares climbing 5% on reports that a poor sales quarter was not as bad as expected.

The announcement came as a surprise to many, as it was made through a post on Truth Social by the President. This unexpected move added to the market's volatility, but ultimately, the news was well-received by investors. The S&P 500's gains were driven by the tech sector, which has been a key performer in recent months.

Apparel stocks also jumped on the news, with Gap Inc, Lululemon, and Nike all shooting up immediately once the deal became public. All three companies have major manufacturing operations in Vietnam. In the minutes after the announcement, Gap rose 2.4% and Lululemon 2.8%. Both then dropped precipitously before evening out in the session’s later hours. At market close, Gap and Lululemon shares were both up 0.5%. Nike had a similar up-and-down in the span of minutes before recovering much faster, closing 4.1%.

The market's reaction to the trade deal highlights the importance of trade agreements in shaping investor sentiment. The S&P 500's new intraday high is a clear indication of the market's optimism about the future of U.S.-Vietnam trade relations. As the deal is implemented, it is expected to have a positive impact on the U.S. economy, further boosting stock market performance.

However, the reaction to the Vietnam trade deal was somewhat muted after an abysmal private-employment report. ADP’s June print of the private sector said it lost 33,000 jobs that month, when analysts had expected an increase of 100,000. That said, ADP numbers have not always been reliable indicators of what the Bureau of Labor Statistics’ monthly reports will show. Investors will still be wondering whether June’s private-sector job losses may be an initial sign of weakness in the labor market. A slackening in the labor market was expected as analysts lowered growth estimates for the year.

“We expect the unemployment rate to edge higher in the second half of 2025 as the labor market softens in response to slower growth, with the full force of tariffs working through the economy,” wrote Oxford Economics’ lead U.S. economist Nancy Vanden Houten in a Wednesday note.

The next BLS report will influence the Fed’s rate decisions at its upcoming July meeting, especially if it proves to be as disappointing as Wednesday’s. Although contrary to what might be expected, investors seem to be brushing off the lackluster jobs report precisely because it might induce the Fed to resume cutting rates.

“Indeed, this morning’s huge miss on ADP jobs is not worrying anyone about the health of the cycle,” said Interactive Brokers senior economist José Torres. “It appears to be just the opposite, with participants excited that the Fed may assume an increasingly dovish posture in order to defend the labor market.”