European shares hit record on strong earnings, US-Ukraine deal
House advances Trump's tax cut plans to Senate
Nvidia to post earnings after the bell
Trump set to announce EU tariffs soon
By Stephen Culp, Chris Prentice and Samuel Indyk
NEW YORK, Feb 26 (Reuters) - U.S. stocks wobbled on Wednesday amid fresh tariff threats while a draft U.S.-Ukraine deal on critical minerals and robust corporate earnings helped European shares close at a record high.
Global shares also gained and benchmark Treasury yields looked set to notch their sixth straight day of declines, while the U.S. dollar rose after House Republicans advanced U.S. President Donald Trump's tax cut plans.
Artificial intelligence poster child Nvidia NVDA.O reports its quarterly earnings later on Wednesday, which could offer clarity on demand and justify or undercut the sector's lofty valuations.
Investor skepticism has grown over the billions that U.S. tech firms have channelled into AI infrastructure due to slow payoffs and to breakthroughs at China's DeepSeek.
"Any signs of weakness in Nvidia's report could have outsized effects on investor sentiment towards AI stocks as a whole," said Saxo's global head of investment strategy Jacob Falkencrone.
The Republican-controlled U.S. House of Representatives late on Tuesday narrowly passed Trump's $4.5 trillion tax-cut plan, sending the budget resolution to the Senate, where Republicans are expected to take it up.
"It's mainly good for corporate U.S.," said Lars Skovgaard, senior investment strategist at Danske Bank.
"There's expected to be less regulation and tax cuts. I would expect it to happen and then it will be positive for markets if they do so."
U.S. housing data showed the sales of new homes fell sharply in January as persistently high mortgage rates sidelined potential homebuyers.
The data is the latest to hint at dampening consumer demand.
The Dow Jones Industrial Average .DJI fell 165.41 points, or 0.37%, to 43,457.58, the S&P 500 .SPX fell 3.69 points, or 0.06%, to 5,951.60, and the Nasdaq Composite .IXIC rose 4.39 points, or 0.03%, to 19,030.78.
European sentiment improved after reports that the U.S. and Ukraine agreed terms of a draft minerals deal, sending European shares up for a second straight day to an all-time closing high.
"(The plan) moved through just a little bit quicker than people were expecting," said Tony Sycamore, a market analyst at IG.
MSCI's gauge of stocks across the globe .MIWD00000PUS rose 1.82 points, or 0.21%, to 868.56.
The pan-European STOXX 600 .STOXX index rose 0.99%, while Europe's broad FTSEurofirst 300 index .FTEU3 rose 22.22 points, or 1.01%.
Emerging market stocks .MSCIEF rose 13.05 points, or 1.16%, to 1,135.43. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed higher by 1.2%, to 596.37, while Japan's Nikkei .N225 fell 95.42 points, or 0.25%, to 38,142.37.
Benchmark U.S. Treasury yields reversed earlier gains amid new tariff uncertainties.
The yield on benchmark U.S. 10-year notes US10YT=RR fell 4 basis points to 4.258%, from 4.298% late on Tuesday. The 30-year bond US30YT=RR yield fell 3.8 basis points to 4.5177% from 4.556% late on Tuesday.
A part of the U.S. Treasury yield curve that is watched by some analysts as a possible recession indicator inverted for the first time since mid-December as concerns about U.S. economic growth and a more optimistic picture on longer-term debt issuance plans pull longer-dated yields lower. The spread between yields on two-year and five-year U.S. Treasuries briefly traded negative.
Fed funds futures now point to 55 bps of easing priced in by year-end, implying at least two quarter-point cuts, up from about 40 bps a week ago. 0#USDIRPR
The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.2% to 106.45, with the euro EUR= down 0.25% at $1.0487. Against the Japanese yen JPY=, the dollar weakened 0.08% to 148.9.
Oil prices touched a two-month low after a surprise build-up in U.S. stockpiles and the growing potential for a Ukraine-Russia peace deal weighed on prices.
U.S. crude CLc1 dropped 0.45% to settle at $68.62 per barrel, while Brent LCOc1 settled at $72.53 per barrel, down 0.67% on the day.
Gold prices were subdued after a recent record rally, while investors looked to inflation data on Friday and digested Trump's latest tariff plans.
Spot gold XAU= rose 0.02% to $2,915.32 an ounce. U.S. gold futures GCc1 rose 0.33% to $2,914.10 an ounce.
World FX rates YTD http://tmsnrt.rs/2egbfVh
Asian stock markets https://tmsnrt.rs/2zpUAr4
(Reporting by Stephen Culp and Chris Prentice in New York and Samuel Indyk and Rae Wee in London; Editing by Sharon Singleton and Nick Zieminski)
((christine.prentice@thomsonreuters.com; +1 (202) 843-6464;))
