S&P 500 and Nasdaq Hover Near Record Highs as Trump's China Deal Confirms TACO Theory

Barry Adams
27 Jun, 2025
New York City

Stock market indexes edged higher in early trading as investors reviewed the latest update on an alternative measure of inflation.

The personal consumption expenditure index rose 2.3%, and the core index accelerated to 2.7% from a year ago, according to the latest data released by the Bureau of Economic Analysis.

The S&P 500 index edged up 0.3%, and the tech-heavy Nasdaq Composite advanced 0.28% as investors returned to increase exposure to riskier assets. 

For the week, the S&P 500 index is up 2.3%, and the Nasdaq Composite has gained more than 2.7%, and both indexes are nearing record highs after the White House backed down from its threats of aggressive import taxes on shipments from key trading partners. 

The so-called TACO trade (Trump Always Chickens Out) dominated market sentiment for the second consecutive month after the White House signaled that the upcoming July 9 deadline for additional tariffs could be extended. 

Over the last two months, Donald Trump has repeatedly backed down after threatening sky-high tariffs on shipments from key trading partners.

Today the Trump administration confirmed a "framework" agreement with China, which confirmed the familiar pattern of chickening out.

Sources in Beijing and Hong Kong confirmed that the U.S. tariffs are likely to be reduced to 10% from the threatened rate as high as 145% and fewer restrictions on shipments of advanced chips in exchange for a relaxed shipment of rare earth minerals. 

The threats of high tariffs and constant flip-flops in the trade policy have left several small and medium-sized businesses with higher operating costs and severe business disruptions, and many businesses are pushed to the brink of closure.

Moreover, the unpredictable nature of the Trump administration's trade policy has also kept foreign investors from setting up new manufacturing operations in the U.S. and dimmed the luster of the U.S. dollar. 

The U.S. dollar continued to hover near the four-year low as global investors avoided the dollar-denominated assets and increased exposure to stocks in Europe and Asia. 

 

Commodities, Currencies, Indexes, Yields

The S&P 500 index increased 0.3% to 6,161.54, the Nasdaq Composite edged up 0.3% to 20,238.31, and the Russell 2000 index advanced 0.2% to 2,175.95.

The yield on 2-year Treasury notes edged higher to 3.75%, 10-year Treasury notes increased to 4.26%, and 30-year Treasury bonds advanced to 4.81%.

WTI crude oil increased $0.64 to $65.88 a barrel, and natural gas prices edged higher by $0.10 to $3.62 a thermal unit.

Gold decreased by $67.88 to $3,360.74 an ounce, and silver edged down by $0.76 to $35.91.

The dollar index, which weighs the US currency against a basket of foreign currencies, decreased by 0.03 to 97.12 and traded at the lowest level since April 2022.

 

U.S. Stock Movers

Nike Inc. soared 10.5% to $69.10, and the athletic shoemaker reported a better-than-expected sales decline of 12% from a year ago in the fiscal fourth quarter ending in May.

The company added that it expects a tariff-linked hit of $1 billion before adjusting for possible price hikes in the months ahead. 

Revenue edged down to $11.10 billion from $12.61 billion, net income dropped to $211 million from $1.50 billion, and diluted earnings per share fell to 14 cents from 99 cents a year ago.