News of the US-Japan trade deal lifted stocks and risk appetite Wednesday as the market saw it as a model for similar deals likely with the European Union and other big trading partners ahead of the Aug. 1 deadline. The Dow Jones industrial average rose 1.1 percent, the S&P 500 gained 0.8 percent to another closing record, and the Nasdaq was up 0.6 percent. US Treasury yields rose, the dollar fell, and oil prices firmed.

President Trump said the US-Japan pact would put tariffs of 15 percent on Japanese goods, including autos and steel now taxed at 25 percent, with key sectors of the Japanese opened to US goods. The EU is reportedly seeking a similar deal and a Financial Times report said an agreement is near. Investors increasingly expect this to be the offramp in the trade war with widespread tariffs at 15 percent, above the 10 percent many hoped for, but tolerable, evidently.

Among sectors, best were energy health care, financials and industrials, with defensive plays including consumer staples and utilities lagging in the broad risk-on trade.

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