BRUSSELS (AP) — Less than two weeks before a NATO summit, Sweden and the Netherlands said Friday that they intend to increase defense spending to 5% of their gross domestic product, in line with U.S. President Donald Trump’s demands.
Trump and his NATO counterparts meet for a summit in the Netherlands on June 24-25, where they’re due to agree a new defense spending target. He insists that Europe must look after its own security, while Washington focuses on China and its own borders.
Swedish Prime Minister Ulf Kristersson said that “Sweden will reach a new NATO spending target to 5% of GDP, where at least 3.5% of GDP will be allocated towards core defense requirements to fulfill NATO’s new capability targets."
“We are in a specific geographical situation where we need to meet the future threats from Russia,” Kristersson told reporters in Stockholm, standing alongside NATO Secretary-General Mark Rutte.
After Russia launched its full-scale invasion of Ukraine on Feb. 24, 2022, NATO's 32 allies agreed to spend at least 2% of GDP on their military budgets. But NATO’s new plans for defending Europe and North America against a Russian attack require investment of at least 3%.
The aim now is to raise the bar to 3.5% for core defense spending on tanks, warplanes, air defense, missiles and hiring extra troops. A further 1.5% would be spent on things like roads, bridges, ports and airfields so armies can deploy more quickly, as well as preparing societies for possible attack.
According to the most recent NATO figures, Sweden was estimated to have spent 2.25% of its GDP on defense last year. The Netherlands spent 2.06%, among 22 of the 32 allies who reached NATO’s old benchmark.
The Dutch caretaker government announced on Friday that it would increase spending on defense to 3.5% of GDP in an effort to meet the 5% goal. It’s not clear where the approximately 18 billion euros ($20 billion) will come from.
Dutch Defense Minister Ruben Brekelmans called the decision “historic” and told reporters after a Cabinet meeting that he hoped other NATO countries would also increase their spending.
“My expectation is that this will happen,” he said.
Poland and the Baltic countries — Estonia, Latvia and Lithuania — have already publicly committed to 5%, and Rutte said last week that most allies were ready to endorse the goal.
A big question still to be answered is what time frame countries will get to reach the new spending goals. A target date of 2032 was initially floated, but Rutte has said that Russia could be ready to launch an attack on NATO territory by 2030.
The United States insists that a near-term deadline must be set. But Italian Foreign Minister Antonio Tajani said on Thursday that his country would get to 5%,. but would require a decade to do so.
Molly Quell reported from The Hague, Netherlands.
Italy's Foreign Minister Antonio Tajani, left, and Mark Rutte, NATO Secretary General, prior to the "Weimar Plus" Ministerial meeting dedicated to Ukraine and European security in Rome, Italy, Thursday, June 12, 2025. (Mauro Scrobogna/LaPresse via AP)
NATO Secretary General Mark Rutte attends the "Weimar Plus" Ministerial meeting in Rome, Thursday, June 12 2025. (Mauro Scrobogna/LaPresse via AP)
Swedish Prime Minister Ulf Kristersson, right, and NATO Secretary General Mark Rutte hold a joint press conference in Stockholm, Sweden, Friday June 13, 2025. (Stefan Jerrevång/TT News Agency via AP)
NEW YORK (AP) — U.S. stocks are ticking higher Friday following a mixed report on the U.S. job market, one that may delay another cut to interest rates by the Federal Reserve but does not slam the door on it.
The S&P 500 rose 0.5% in morning trading and was on track to top its all-time high set earlier in the week. The Dow Jones Industrial Average was up 182 points, or 0.4%, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 0.6% higher.
The quiet trading came after the U.S. Labor Department said employers hired fewer workers in total during December than economists expected, though the unemployment rate improved and was better than expected. It reinforced how the U.S. job market may be in a “ low-hire, low-fire” state.
The improvement in the unemployment rate was enough to get traders to ratchet back expectations for a cut to interest rates at the Fed's next meeting, which is scheduled for later this month. Traders are now forecasting just a 5% chance of that, down from 11% a day before, according to data from CME Group.
But traders nevertheless still largely expect the Fed to cut rates at least twice this upcoming year. Whether they’re correct carries high stakes for financial markets. Lower interest rates can goose the economy and push up prices for investments, though they can also worsen inflation at the same time. And inflation has stubbornly remained above the Fed's 2% target.
“Until the data provide a clearer direction, a divided Fed is likely to stay that way,” according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “Lower rates are likely coming this year, but the markets may have to be patient.”
After the report, Treasury yields were mixed in the bond market. The yield on the 10-year Treasury eased to 4.17% from 4.19% late Thursday. It tends to track expectations for longer-term economic growth and inflation.
The two-year Treasury yield, which more closely tracks forecasts for what the Fed will do with short-term interest rates in the near term, ticked up to 3.51% from 3.49%.
A separate report released Friday morning suggested sentiment among U.S. consumers is strengthening, particularly among lower-income households. Perhaps more importantly for the Fed, the preliminary report from the University of Michigan also said expectations for inflation in the coming 12 months may be at their lowest level in a year. That could prevent a vicious cycle where worsening expectations lead to behaviors that accelerate inflation further.
On Wall Street, power company Vistra soared 14% to help lead the market after signing a 20-year deal to provide electricity to Meta Platforms from three of its nuclear plants. Big Tech companies have been signing a string of such deals to electrify the data centers powering their moves into artificial-intelligence technology.
Oklo jumped 15.2% after saying it also signed a deal with Meta Platforms that will help it secure nuclear fuel and advance its project to build a facility in Pike County, Ohio.
They helped offset a 3.6% drop for General Motors. The auto giant said it will take a $6 billion hit to its results for the last three months of 2025 related to its pullback from electric vehicles. That’s on top of the $1.6 billion in charges GM took in the prior quarter. Fewer tax incentives and easier fuel-emission regulations have been eating into demand for EVs.
WD-40 tumbled 7.3% after reporting a weaker profit for the latest quarter than analysts expected. Chief Financial Officer Sara Hyzer said the soft numbers were primarily because of timing issues, not weaker demand from end customers, and the company stood by its financial forecasts for the upcoming year.
In stock markets abroad, indexes rose across much of Europe and Asia.
The French CAC 40 rose 1%, and Japan’s Nikkei 225 jumped 1.6% for two of the world’s bigger gains. In Tokyo, Fast Retailing, the fashion company behind Uniqlo, jumped 10.6% after its quarterly operating profit surged about 34% year-on-year. It revised its full-year forecasts upward.
AP Business Writers Chan Ho-him and Matt Ott contributed.
Christopher Lagana and James Denaro work on the floor at the New York Stock Exchange in New York, Friday, Jan. 9, 2026. (AP Photo/Seth Wenig)
Aman Patel works on the floor at the New York Stock Exchange in New York, Friday, Jan. 9, 2026. (AP Photo/Seth Wenig)
Daniel Kryger works on the floor at the New York Stock Exchange in New York, Friday, Jan. 9, 2026. (AP Photo/Seth Wenig)
Specialist Anthony Matesic works on the floor of the New York Stock Exchange, Thursday, Jan. 8, 2026. (AP Photo/Richard Drew)
Trader Anthony Confusione works on the floor of the New York Stock Exchange, Thursday, Jan. 8, 2026. (AP Photo/Richard Drew)
A dealer walks past near a screen showing the Korea Composite Stock Price Index (KOSPI) at a dealing room of Hana Bank in Seoul, South Korea, Thursday, Jan. 8, 2026. (AP Photo/Lee Jin-man)
A dealer watches computer monitors at a dealing room of Hana Bank in Seoul, South Korea, Thursday, Jan. 8, 2026. (AP Photo/Lee Jin-man)
A board above the trading floor of the New York Stock Exchange displays the closing number for the Dow Jones industrial average, Wednesday, Jan. 7, 2026. (AP Photo/Richard Drew)
A dealer walks past near the screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Thursday, Jan. 8, 2026. (AP Photo/Lee Jin-man)
A dealer walks past near the screens showing the foreign exchange rates at a dealing room of Hana Bank in Seoul, South Korea, Thursday, Jan. 8, 2026. (AP Photo/Lee Jin-man)
