U.S. and Canada Resume Negotiations…S&P 500 and Nasdaq Set Successive Record Highs

Due to the tax cut bill, electric vehicle and clean energy stocks weakened

Bond yields fell on weak consumer spending and expectations of slowing employment

As trade negotiations between the United States and Canada, which had been at risk of being halted, resumed, the U.S. stock market recorded another all-time high for both the S&P 500 and the Nasdaq Composite on the 30th (local time).

As of 10:10 a.m. Eastern Standard Time, the S&P 500 index rose by 0.2%, surpassing last Friday's previous record. The Nasdaq Composite also rose by 0.2% above its previous record, while the Dow Jones Industrial Average climbed by 0.3%.

The day's gains were attributed to Canada abolishing the digital services tax to resume trade talks with the U.S. The first payment of the digital services tax was scheduled to start on this day and was set to apply to companies such as Google, Meta, and Amazon. Alphabet, Google's parent company, Meta Platforms, and Amazon each opened the session up by 1%.

Personal consumption expenditure data released over the weekend showed a 0.1% decrease, which was weaker than expected, heightening expectations for an interest rate cut. The 10-year Treasury yield was down by 2 basis points (1bp = 0.01%), reaching 4.25%. The 2-year Treasury yield also dropped by 2bp to 3.73%, nearing a two-month low.

Bonds are expected to rise further (meaning bond yields will fall) with Thursday's employment report seen as a potential catalyst. Interest rates are at their lowest in two months, and investors expect the Federal Reserve to cut rates at least twice this year.

Bitcoin rose 0.4% to trade at $107,863.89. Ether increased by 1.6% to reach $2,473.06.

Most electric vehicle companies such as Tesla, as well as solar firms, declined on the day, while nuclear power company stocks advanced. This was because Trump's tax cut bill (BBB), making its way through the Senate, shifted the clean energy tax credit policy—including for electric vehicles, solar and wind power projects—unfavorably compared to previous drafts.

The $7,500 EV purchase tax credit, previously set to expire at year-end, is now scheduled to end as of late September. Tax credits for solar and wind energy projects, which had been available to projects starting construction by the end of 2027, will now only apply to those completed by 2027, reducing eligibility.

Tesla CEO Elon Musk strongly criticized the bill, declaring it to be "completely insane, benefiting legacy industries and causing serious harm to industries of the future." Tesla fell another 0.5% for the day, facing a five-day losing streak.

The bill also includes incentives for nuclear power generation. So far this year, nuclear-related companies such as NRG Energy, Constellation Energy, Oklo, and NuScale Power have seen their stocks soar, though they mostly paused on this day.

NRG Energy rose 80.3% this year, recording the highest return among S&P 500 index companies. The software company Palantir also climbed 4.7% after announcing last week a partnership with Nuclear Company to develop AI-based software for nuclear power plant construction.

Most clean energy firms such as Enphase Energy saw their stocks decline, but First Solar soared over 6% for the day. The tax cut bill was seen as favorable for U.S. manufacturers like First Solar because it imposes excise taxes on projects using Chinese-made solar and wind power components.

Jung-A Kim, Guest Reporter kja@hankyung.com