Stocks Warm to Trump’s Japan Trade Deal. Why That’s Masking Bad News.

President Donald Trump takes the stage during a reception for Republican members of the House of Representatives. (Chip Somodevilla/Getty Images)

​Trade deals are like buses. You wait a long time for one—and then three come along at the same time.

The deal with Japan, announced late Tuesday, was a surprise. Trump himself said just a few weeks ago he didn’t think he’d get to an agreement with the second-biggest economy in Asia before the Aug. 1 deadline. The frameworks for Indonesia and the Philippines are also a sign of progress.

Traders breathed a sigh of relief and stocks pushed higher from records. The hope is that a flurry of deals is imminent. The European Union, the biggest U.S. trading partner, may be up next. India is possible, and there could be more details soon on how the relationship with China, the world’s second-biggest economy, will end up.

Here’s the good news: tariff rates look like they’ll soon be stable, which will help businesses with planning, and they are likely to be lower than once feared. What’s more, Trump is championing U.S. technology firms, a big driver of stock market gains, as part of the negotiations, The Wall Street Journal reported, citing people familiar with the talks.

The glass-half empty view is that the tariffs will still be a lot higher than what was there before Trump came to power. Sectoral tariffs targeting industries like autos could really hurt— General Motors said Tuesday it’s already taken a $1 billion hit from the taxes on imports. While Japanese car makers Toyota, Honda, and Nissan were getting a boost from the Japan deal Wednesday, their U.S. customers will still face significantly higher costs in the future.

Another sector is defense, and weapons maker RTX cited tariffs as a headwind despite a big boost in demand. Pharmaceuticals should bargain on high tariff rates for their industry—Trump has mentioned 200%—but they still don’t know the details.

Traders are currently optimistic as they look back at how much worse tariffs might have been. Investors have been quick to jump on board this latest ride higher but the wheels could come off as company earnings take a trade hit.

—Brian Swint

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White House Announces Revised Trade Terms for Japan, Others

With President Donald Trump’s Aug. 1 trade deal deadline days away, he hopes to unveil a “rash” of deals, according to Treasury Secretary Scott Bessent. But on Tuesday, the administration revealed revised terms for three of Trump’s previously set tariff deals.

• Trump set 15% tariffs on goods imported into the U.S. from Japan, a revision that is down from his 24% rate announced on April 2, and this month’s threat of 25% tariffs. He also said Japan would invest $550 billion, at his direction, in the U.S., which will get 90% of the profit.
• Trump revised terms for two other countries, Indonesia and the Philippines. The rate for imports from Indonesia will remain at the 19% set earlier this month, but Indonesia will sell critical minerals to the U.S. and buy billions of dollars of Boeing planes and U.S. farm and energy products.
• After meeting with Philippine President Ferdinand Marcos Jr., Trump set tariffs of 19% on goods imported to the U.S. from the Philippines. That’s lower than the 20% Trump unilaterally announced last week but higher than his April 2 rate of 17%. Initially Trump set tariffs at 32% for Indonesia’s products.
• General Motors said that new tariffs on imported cars and auto parts slashed $1.1 billion from its bottom line, as second-quarter net income shrank 35%. Greater effects from tariffs are seen in the current quarter, GM said, though it maintained its full-year profit outlook.

What’s Next: London-listed AstraZeneca is spending $50 billion by 2030 to manufacture drugs in the U.S., including new multibillion-dollar facilities in Virginia, Massachusetts, and California and expanded factories in Texas and Indiana.

— Anita Hamilton, Reshma Kapadia, and Al Root

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History Shows the S&P 500 Isn’t Done Hitting Records in July

The S&P 500 set yet another record on Tuesday, its 11th of the year, and it isn’t likely to be the last one this year. Going back to 1980, the index hit its high for the year in the fourth quarter about three-fourths of the time, DataTrek found.

• The index has peaked 24 times for the year in December during that time, four times in October, four times in November, and only once each in August and July. DataTrek co-founder Nicholas Colas says the odds are higher the S&P peaks later this year rather than this month.
• President Trump’s tariff threats are provoking a trade war. But investors seem to have shrugged off those concerns, leaning on faith in TACO, acronym penned by the Financial Times for the idea that Trump Always Chickens Out, or backs down from big threats.
• The S&P 500 returns about 10% a year on average, so it isn’t surprising that in most years the index gradually drifts upward over the year. Historically, the five times the market peaked in January, it subsequently fell, finishing with average annual declines of nearly 19%.
• The one previous July peak arrived in 1990—just before Iraq invaded Kuwait that August. That was a political shock that led the index to finish out the year with a 3% decline.

What’s Next: In the years when the market has peaked in the fourth quarter—which is the majority of the time since 1980—the market has seen an average return of around 20%, DataTrek found.

—Ian Salisbury and Janet H. Cho

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Texas Instruments Offers Disappointing Outlook as SAP Reiterates Forecast

Texas instruments offered a disappointing outlook, a potentially ominous sign from this bellwether for the technology industry and the economy. It is the first major chip maker to report June quarter earnings. Management told investors the auto market hasn’t recovered and the risk of new tariffs isn’t over.

• Texas Instruments sells basic chips that go into products in nearly every sector of the economy, from autos and industrials to consumer electronics. While it beat June quarter expectations, it forecast earnings of $1.36 to $1.60 a share for the current quarter, below expectations.
• The company is spending $60 billion across seven U.S. manufacturing sites to boost production, including a mega-site in Texas. In the second quarter it invested $3.9 billion in research and development and $4.9 billion in capital expenditures.
• German enterprise software maker SAP is keeping an eye on geopolitical developments and public sector trends. There is concern that tariffs will cause enterprises to cut back on IT spending as costs rise.
• SAP posted second-quarter earnings of €1.50 ($1.76) a share, which beat Wall Street estimates, while revenue of around 9.03 billion euros just missed expectations. Cloud revenue rose 24% but slowed from a 25% gain a year ago.

What’s Next: SAP also reiterated its 2025 financial outlook. The company continues to expect 2025 cloud revenue to be between €21.6 billion to €21.9 billion, putting it on pace to rise 27% from the prior year. SAP remains focused on artificial intelligence and moving customers to the cloud.

— Tae Kim and Angela Palumbo

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Microsoft Says China-Linked Hackers Behind SharePoint Attacks

Microsoft said Chinese hackers exploited security vulnerabilities in the software company’s internal file-sharing platform SharePoint and urged customers to adopt security updates immediately, in a blog post Tuesday.

• The security breach, first reported over the weekend, involved hacking groups Linen Typhoon and Violet Typhoon, Microsoft said. It added these groups are linked to the Chinese government. Both Linen Typhoon and Violet Typhoon have been charged by U.S. courts for digitally attacking both companies and government institutions.
• Hackers, which also included China-based group Storm-2603, attempted to “gain initial access to target organizations,” Microsoft said.
• Microsoft has released security updates for all supported versions of SharePoint Servers affected by the security vulnerability, it said, and urged customers to apply the patches immediately.
• The Department of Energy, including the nuclear weapons agency, were among those affected by the security breach, Bloomberg reported citing one person familiar with the matter. No sensitive or classified information was leaked, according to the person. The department was contacted for a comment.

What’s Next: Microsoft said that investigations into other actors attempting to exploit similar vulnerabilities are ongoing. The company added that it’s seeing a rapid adoption of these types of attacks, and that cybercriminals are likely to continue to use them to target its SharePoint systems.

— Nate Wolf and Elsa Ohlen

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Coca-Cola Confirms Adding Cane Sugar to Product Line

Coca-Cola confirmed what President Trump announced last week, that it will offer drinks sweetened with cane sugar in the U.S. The new product debuts this fall alongside beverages with high-fructose corn syrup. Coca-Cola, which also reported mixed results, would likely test market cane sugar Coke first.

• CEO James Quincey sees it as a lasting option for American consumers. It already makes Coke with cane sugar in other markets, and uses cane sugar in products sold in the U.S. such as lemonade, tea, coffee, and vitamin water drinks.
• The company’s second-quarter adjusted earnings of 87 cents a share beat expectations, but revenue of $12.5 billion fell slightly short of forecasts. Coca-Cola lifted its full-year earnings expectations to 3% growth, up from the previous 2% to 3% range, but said lower-income consumers remain pressured.
• Beverage makers are trying to appeal to shifting tastes. Quincey said they are looking to use a variety of available sweetening options where there are consumer preferences. Last week, PepsiCo CEO Ramon Laguarta also said they are open to introducing products with sugar if demand is there.
• But there are risks. Stephens analyst Pooran Sharma says it doesn’t make sense for a big commodity buyer to suddenly change its cost structure and potentially spike its costs. Consumer preferences might let Coca-Cola and Pepsi charge a premium for products free of high-fructose corn syrup.

What’s Next: Americans consume about 12.5 million tons of sugar each year, while only four million tons of cane sugar is domestically produced. Quincey said Coca-Cola has enough sugar for the new product and that if demand for sugar rises, “they’ll plant more acres.”

— Evie Liu, Mackenzie Tatananni, and Janet H. Cho

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Dear Quentin,

I am 70 years old. I know I should not be concerned about money but I would like your opinion very much.

I have $1.5 million in an IRA and another $1.5 million in a pension from which I can take a lump sum. I also am getting $72,000 a year from Social Security with my wife. I have a home worth $1.3 million with $900,000 in equity. I have not paid it off as I have a 3% interest rate.

I am still working and make $250,000 per year. I also have side investments worth $700,000. Do you think I am ready for retirement? We do not live an extravagant life. We spend time with kids and grandkids. I usually give my three kids $20,000 per year.

I also have $500,000 in permanent life insurance. I have a degree in economics from a very prestigious college. I make my own investments.

— Working & Living

Read the Moneyist’s response here.

— Quentin Fottrell

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—Newsletter edited by Liz Moyer, Rupert Steiner