Stocks close higher, bonds sell off after Trump-UK trade deal, Goldman warns on inflation
U.S. stocks closed higher after President Donald Trump announced a trade deal with the United Kingdom.
The S&P 500 added 32.66 points, or 0.6%, to close at 5,663.94, while the Dow Jones Industrial Average was up 254.48 points, about 0.6%, to settle at 41,368.45. The Nasdaq jumped 189.98 points, nearly 1.1%, to end the day at 17,928.14.
Trump said the deal was a "breakthrough" while UK Prime Minister Keri Starmer called it a “really fantastic, historic day,” via speakerphone. Some analysts hope the deal will mark a step toward agreements with other countries, since the trade relationship between the UK and the U.S. has never been especially problematic.
The benchmark 10-year Treasury note surged nearly 10 basis points, to close near 4.37%. Bond yields rise when prices fall.
Economic news
Earlier in the morning, Trump took to social media to decry the Federal Reserve's decision to hold interest rates steady. He called Fed Chair Jerome Powell a "FOOL, who doesn't have a clue."
But Powell has made it clear that the White House's trade war presents a unique challenge for the central bank. By raising prices on goods and services, tariffs will exacerbate inflation, which could be a reason to raise rates. If prices go up and businesses have to make hard decisions about whether to expand and hire or cut back and lay off workers, it may be a reason to cut borrowing costs.
On Thursday morning, the Labor Department reported that weekly claims for jobless benefits were lower than the week before, suggesting employers are not yet shedding workers. But investment bank Goldman Sachs released research overnight that revealed its analysts expect a sharp surge of inflation: "Most core goods categories will accelerate sharply this year, and we forecast core goods inflation of 6.3% in December 2025," the researchers wrote.
Corporate news
- AppLovin reported stronger-than-expected quarterly results Wednesday after the closing bell. Shares closed about 12% higher Thursday.
- Shopify shares ticked lower after an earnings miss.
- Shoemaker Crocs announced results that beat analyst expectations, but withdrew guidance for the year, citing "the new global trade environment as well as business and consumer uncertainty." The stock rose nearly 10%
- Shares of Molson Coors lost about 4.6% after the beermaker announced a 42% plunge in profits.
- Disney shares gained for a second day after the entertainment company reported a strong quarter and announced plans for a new theme park in the United Arab Emirates.