US stock market today: S&P 500 hits record high, Dow jumps over 500 points as trade deal optimism boosts sentiment

US stocks surged on Friday afternoon, pushing the S&P 500 and Nasdaq toward fresh record highs amid easing trade tensions and upbeat economic signals. The Dow Jones Industrial Average also climbed 510 points, or 1.2%, as broad-based gains lifted nearly every sector in the S&P 500.The rally marks a sharp turnaround from earlier this year, when the S&P 500 fell nearly 20% on fears that President Donald Trump’s trade policies would derail the economy. As of 12:13 p.m. Eastern, the S&P 500 was up 0.7% and the Nasdaq 0.6%, AP reported.Nike led market gains with an 18.5% jump, despite warning of a $1 billion tariff impact and announcing “surgical” price hikes in the US starting this fall. Other consumer and industrial stocks also advanced, buoyed by easing tensions in the Middle East and signs of progress in US-China trade talks.US Treasury Secretary Scott Bessent said Friday that a new trade deal will ease access to rare earth materials critical for manufacturing. China's Commerce Ministry also said both sides had "confirmed the details of the framework" for talks, though it did not specifically mention rare earths access.Meanwhile, a ceasefire between Israel and Iran remained in effect, helping stabilise oil prices. US crude held flat, retreating to pre-conflict levels.Inflation continues to shadow market optimism. On Friday, the Fed’s preferred inflation gauge—the personal consumption expenditures (PCE) index—rose to 2.3% in May, up from 2.1% in April and still above the central bank’s 2% target. Analysts warn that more pronounced inflationary effects from tariffs could emerge in the coming months."While we also would have expected to already be seeing a bit more pass through into the inflation statistics, we still expect these impacts to show up in a more meaningful way in the next few months," said Greg Wilensky, head of US fixed income at Janus Henderson, quoted AP.The Fed has not cut rates in 2025 so far, maintaining caution amid lingering concerns that tariffs could reignite price pressures. Economists still anticipate two cuts before year-end.Bond yields were little changed, with the 10-year Treasury yield ticking up to 4.25% and the two-year note at 3.73%.Stocks in Europe were mostly higher, with investors tracking the US rally and global trade developments. Asian markets closed mixed, with gains in Tokyo offset by losses in Shanghai and Seoul.