Markets Set Fresh Records on EU Trade Deal, But Momentum Fades Into the Close

U.S. stocks opened with strength on Tuesday, buoyed by the announcement of a long-anticipated trade agreement between the U.S. and the European Union. The positive sentiment quickly propelled the S&P 500 and Nasdaq Composite to new all-time intraday highs, yet a lull in fresh catalysts saw much of that momentum fade as the session wore on.

The S&P 500 touched a new record intraday peak of 6,401.07 before losing steam. It ultimately managed to squeeze out a modest gain of 1.13 points to finish at a new closing high of 6,389.77. The Nasdaq Composite fared slightly better, closing at 21,178.58, also a new record, after climbing as high as 21,202.18 during the session. The Dow Jones Industrial Average, however, bucked the trend, dipping 0.1%.

The trade deal, which imposes a 15% tariff on EU imports but includes carveouts for key industries like aerospace components, semiconductor equipment, and select raw materials, was the day’s main catalyst. Additionally, the EU agreed to invest $600 billion into the U.S. economy and committed to purchasing $750 billion in U.S. energy exports.

That energy pledge, along with a 2.4% rise in oil prices to $66.75 per barrel, propelled the energy sector (+1.0%) to the top of the leaderboard.

Elsewhere, gains were modest and narrow. Only two other sectors — consumer discretionary (+0.7%) and information technology (+0.8%) — managed to finish in the green. Semiconductor stocks helped buoy tech shares, with the PHLX Semiconductor Index rising 1.6%, aided by the deal’s favorable treatment of chipmaking equipment.

In the consumer discretionary space, Tesla (TSLA +3.0%) regained nearly all of last week’s post-earnings losses after announcing a $16.5 billion chip production deal with Samsung Electronics for its next-gen AI6 processors. Amazon (AMZN +0.6%) also provided support ahead of its quarterly report due Thursday.

Still, despite the strong open, the market saw broad-based selling pressure build in the afternoon. Breadth figures deteriorated sharply, with decliners outnumbering advancers nearly 2-to-1 on the NYSE and nearly 3-to-1 on the Nasdaq, signaling growing investor caution.

This week remains crucial, with nearly 38% of the S&P 500’s market cap set to report earnings, including four members of the “Magnificent 7.” On top of that, markets are eyeing macro developments closely, as U.S.-China trade talks kicked off in Stockholm — potentially setting the stage for yet another pivotal agreement.

After last week’s strong performance, our FTinvest 11 portfolio spent Monday in defensive mode, working to preserve recent gains. The session was marked by a steady pullback, as selling pressure persisted through most of the day.

Despite the weakness, the index managed to hold the critical 800 level, showing resilience even as momentum faded. By the close, FTinvest 11 slipped 0.52% to finish at 803.74, maintaining a solid buffer above its recent breakout zone.

While the retreat wasn’t unexpected after last week’s rally, the portfolio’s ability to stay near record levels suggests underlying support remains intact.