Wall Street Rallies as First Trade Deal Reached

U.S. stocks rallied Thursday as investors cheered a new trade agreement hammered out between the United States and Britain, while U.S. President Donald Trump signaled upcoming talks with China would be more substantial than initially thought.

Britain agreed to lower its tariffs to 1.8% from 5.1% and provide greater access to U.S. goods as part of the deal, while a 10% baseline tariff on goods imported from the UK into the U.S. remains in place.

Airline stocks shot higher after the U.S.-UK agreement exempted plane parts made by Rolls-Royce from tariffs, with the S&P 500 passenger airlines index up about 6%, led by a surge in Delta Air Lines.

U.S. Commerce Secretary Howard Lutnick said the UK would buy $10 billion of Boeing aircraft, sending the planemaker's shares higher as the best performer on the Dow.

Urgent: The U.S. Dollar as the World Reserve Currency Is Ending Now... See More Here

Trump also said he expects substantive negotiations between the U.S. and Beijing on the trade front this weekend and wouldn't be surprised if a deal was reached.

"It did respond positively today to the announcement with the UK. Trump's a showman, and so when he said that those talks this weekend in Geneva are going to be substantive, you have to take him at his word, but you never know," said Scott Welch, chief investment officer at Certuity in Potomac, Maryland.

"The market is looking for an excuse to exhale and believe that we're going to get to a more reasonable outcome here than just an all-out global trade war."

According to preliminary data, the S&P 500 gained 32.58 points, or 0.58%, to end at 5,663.86 points, while the Nasdaq Composite gained 188.37 points, or 1.06%, to 17,926.53. The Dow Jones Industrial Average rose 268.77 points, or 0.62%, to 41,382.74.

On the sector level, consumer discretionary and energy led gains while healthcare and utilities were the laggards.

The domestically focused Russell 2000 small cap index rose about 2% to hit its highest level since April 2, the day the tariffs were initially announced.

Semiconductor stocks advanced about 2%, building on the 1.7% rise in the prior session after a spokesperson said the Trump administration was planning to rescind and modify a rule that curbed the export of sophisticated artificial-intelligence chips.

The U.S. Federal Reserve held interest rates steady on Wednesday and flagged heightened risks of inflation and unemployment, further clouding the economic outlook for the world's largest economy.

Markets still see the first cut of at least 25 basis points from the Fed at its July meeting, although expectations have dipped to 60% from 92% a week ago, according to CME's FedWatch Tool.

Alert: Wall Street Elites Are Running for Cover... See Why Here

On the economic front, weekly initial jobless claims fell more than expected last week, suggesting for some analysts the labor market remains on stable footing, but a separate report showed worker productivity dropped in the first quarter for the first time in nearly three years.

Among others, U.S.-listed shares of Arm dropped after the chipmaker forecast first-quarter revenue and profit below Wall Street estimates.

Tapestry rose after the luxury group raised its annual forecasts while Krispy Kreme's shares plummeted 26.7% after the restaurant chain became the latest to withdraw its full-year forecast.