Wall Street Sentiment Improves on U.S. Trade Deals, But Fed Uncertainty Looms

Key Takeaways:

*The U.S. will impose a reduced 15% tariff on Japanese imports—down from the previously threatened 25%—while Japan pledged $550 billion in investments targeting U.S. infrastructure and LNG sectors.

*The S&P 500 and Dow Jones closed higher, with the Dow gaining nearly 200 points. The Nasdaq touched a new intraday high but retreated to end the session lower.

Market Summary:

Investor sentiment brightened in the previous session after President Trump announced that the U.S. had reached separate trade agreements with Japan and the Philippines, easing fears ahead of the looming August 1 tariff deadline.

Under the new terms, Japanese imports will face a reduced 15% tariff—down from the initially threatened 25%—while Japan committed to a $550 billion investment in U.S. infrastructure and industries such as LNG, boosting prospects for domestic growth. The Philippines also agreed to a 19% tariff framework, adding to the broader optimism across markets.

U.S. equities responded positively. The S&P 500 and Dow Jones advanced, with the latter gaining nearly 200 points. Although the Nasdaq initially touched a fresh high, it later pared gains and closed lower. Meanwhile, the CBOE Volatility Index (VIX)—often dubbed Wall Street’s “fear gauge”—remained subdued near the 16.00 level, underscoring a prevailing risk-on sentiment.

Still, attention is turning to next week’s Federal Reserve policy decision. While markets widely expect the Fed to hold interest rates steady, traders remain cautious over potential inflationary implications stemming from Trump’s tariff policy. A hawkish tilt from the central bank could weigh on equities and trigger a technical pullback in the near term.

Technical Analysis

Dow Jones, H1

The Dow Jones Industrial Average has recently formed an inverted head-and-shoulders pattern, a classic technical formation that typically signals a bullish reversal. Despite a brief retracement from its recent rally, the index has managed to hold firm above a critical support zone near the 44,230 level.

Currently, the index is facing a key resistance at 44,660. A successful breakout above this level—while avoiding the formation of a potential triple-top—would likely confirm a bullish continuation and open the door for further upside.

Momentum indicators are also tilting in favor of the bulls. The Relative Strength Index (RSI) is climbing toward the overbought territory, suggesting growing buying pressure. Meanwhile, the MACD appears to be rebounding above the zero line, reinforcing the view that fresh bullish momentum may be taking shape.

Traders will be closely monitoring whether the index can sustain this momentum and breach near-term resistance levels, which could solidify the bullish outlook.

Resistance Levels: 44,840.00, 45,050.00
Support Levels: 44,555.0, 44,250.00