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By Ben St. Clair and Danielle Chemtob 

U.S. stocks surged in the final half hour of trading Wednesday after President Trump secured some concessions from the European Union to avoid an escalation in trade tensions.

The blue-chip index climbed 172 points, or 0.7%, to 25414 after earlier declining as much as 128 points. The S&P 500 rose 0.9%, and the technology-heavy Nasdaq Composite gained 1.2%.

President Trump and European Commission President Jean-Claude Juncker agreed to lower industrial tariffs on both sides and increase liquefied natural gas and soybean exports to Europe, a European official told The Wall Street Journal.

Shares of industrial firms in the S&P 500 rallied 1.2% following the news.

The official also said the delegations were finalizing a statement on auto tariffs. Heightened concerns that President Trump would proceed with a plan to levy tariffs on auto imports has recently pressured shares of car makers.

The potential for a reprieve on trade tensions added to momentum from what is shaping up to be a strong corporate-earnings season. About 28% of companies in the S&P 500 have reported results for the latest quarter, and earnings are up 20% so far for companies in the index that have reported.

Coca-Cola and United Parcel Service both posted stronger-than-expected revenue growth, pushing their shares up 1.8% and 6.9%, respectively. Coca-Cola also said it would raise its prices on its carbonated sodas in North America in response to rising costs from the tariffs and other factors.

Stephen Lee, principal and portfolio manager at Logan Capital Management, said his firm is closely analyzing which companies are able to pass tariffs and rising commodities prices onto consumers.

"Pricing power is going to be key, even without tariffs, even without the other issues," he said. "As we get closer to full employment, there will probably be some higher costs."

Boeing shares slumped 2.3% as its results weren't as strong as some analysts and investors expected. The aerospace giant, though, raised its revenue outlook for 2018 despite the trade tensions the company has said will affect its input costs.

AT&T, meanwhile, reported lower revenue in its latest quarter as its satellite-TV business suffered major losses. Its shares dropped 4.5%.

Shares of General Motors declined 4.6% after falling more than 6% earlier in the day. GM lowered its 2018 profit outlook based partly on unexpectedly high raw-materials costs in the wake of U.S. tariffs on steel and aluminum.

"I think what a lot of people are focused on today is the question mark of, have we seen peak earnings power because the first half of 2018 has been so strong?" said Martin Jarzebowski, vice president and portfolio manager with Federated Investors.

The technology sector rose 1.5% in anticipation of Facebook's latest results. The social-media giant reported slower-than-expected revenue growth in the second quarter, indicating the company felt some effects from a series of controversies over the past several months. Shares slumped 8% after hours and pulled down other social-media stocks, including Twitter and Snap.

Many investors are still worried that regulation is a looming threat for technology companies.

"When profit margins are this high, the temptation for politicians one way or the other to skim a little bit off the top is going to grow," David Kelly, chief global strategist at J.P. Morgan Asset Management.

The strengthening dollar is another growing headwind for technology companies, which derive a significant percentage of their revenue abroad. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, slipped 0.4% but is up 2.4% for the year.

"A stronger dollar is not a beneficial dynamic for a lot of companies," Mr. Jarzebowski said.

The yield on the 10-year Treasury note fell to 2.936% from 2.949% Tuesday. Yields fall as prices rise.

In commodities markets, crude oil added 1.1% to $69.30 a barrel after government data showed a larger-than-expected drop in crude inventories.

Elsewhere, the Stoxx Europe 600 fell 0.3%.

In Asia, the Shanghai Composite Index dropped 0.1% and Japan's Nikkei Stock Average added 0.5%.

(END) Dow Jones Newswires

July 25, 2018 16:59 ET (20:59 GMT)

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