The European Union is negotiating an outline trade agreement with the Trump administration in which it would accept 15% tariffs on most exports to the U.S., following a similar agreement between the U.S. and Japan on Tuesday.
Under that agreement, the U.S. will levy 15% tariffs on Japanese goods, with tariffs at the same level on the Japanese auto industry. In addition, Japan will invest $550 billion in America.
Wednesday, the Dow Jones Industrial Average added to its gains after the Financial Times reported the U.S. and EU were closing in on their own 15% tariff deal. The blue-chip index rose 1.1%, or 508 points.
The Japan deal raised hopes for similar agreements with U.S. trading partners that are major car producers and have yet to strike deals. Automakers such as Korea’s Hyundai and Germany’s Volkswagen rallied, while Toyota and Honda each notched double-digit percentage gains in Japan.
Meanwhile, earnings season is in full swing. AT&T gained more wireless and internet subscribers than expected, and its revenue topped forecasts. Hotel operator Hilton also posted better-than-projected results, but its outlook for this quarter disappointed investors.
U.S. stocks rose. The S&P 500 climbed 0.8% to a third straight record. The Nasdaq composite added 0.6%, closing above 21,000 for the first time. The Dow ended the day within 0.1% of its closing high set in December.
Japan’s Nikkei 225 jumped to its highest close in around a year. European and other Asian indexes gained, with the FTSE 100 notching a record high.
Japanese bond yields rose, with the 10-year yield settling at its highest since 2008. A bond auction met with weak demand amid reports Shigeru Ishiba might resign as prime minister, which he denied.
U.S. Treasury yields gained as well. The yield on the 10-year note rose to 4.387%.
Check out our full roundup of the day in trading or listen to the WSJ Minute Briefing podcast.