U.S. stock markets continued their upward momentum on Monday, pushing indices to fresh record levels as Wall Street moves closer to completing a second straight month of gains. The S&P 500 rose 0.2% in early trading, marking a strong rebound from its roughly 20% drop earlier this year. The Dow Jones Industrial Average gained 133 points, or 0.3%, while the Nasdaq Composite also climbed 0.2% by mid-afternoon.
Markets were buoyed by Canada’s announcement that it will cancel a planned tax targeting U.S. tech companies and resume trade discussions with the United States. This development follows U.S. President Donald Trump’s recent decision to suspend talks with Canada in protest of the tax, which he labeled “a direct and blatant attack on our country.”
One key factor behind the rapid stock recovery from the spring sell-off has been optimism that President Trump will secure trade agreements with other nations, easing concerns over the tariffs he has proposed. If unresolved, these trade tensions could hinder economic growth and push inflation higher.
Currently, many of Trump’s announced tariffs remain on hold but are set to resume in just over a week. In an interview on Fox News Channel’s “Sunday Morning Futures,” Trump indicated that his administration will soon notify affected countries that tariffs will take effect unless deals are reached. He said letters to this effect will be sent “pretty soon” ahead of the deadline.
However, some strategists warn that the market’s current highs could increase the likelihood of renewed tariff escalations. Analysts at Deutsche Bank pointed to a pattern from 2018 and 2019, where rallies were often followed by tariff hikes, then market declines, and subsequent tariff rollbacks sparking new rallies.
“Despite the rhetoric, this cycle appears to be continuing,” the strategists wrote. They added that if tariffs begin to significantly impact growth, earnings, or inflation, further tariff reductions may occur.
Among individual stocks boosting the S&P 500 was Oracle, which jumped 4.7% after CEO Safra Catz reported a strong start to the company’s fiscal year, including signing major cloud services contracts. Bank shares also performed well after the Federal Reserve affirmed their financial strength in the face of a potential economic downturn. JPMorgan Chase rose 1%, Wells Fargo gained 0.8%, and Citigroup added 0.6%.
GMS, a supplier of specialty building products, saw its stock soar 11.8% after announcing a deal to be acquired by a Home Depot subsidiary for $110 per share in cash, valuing the company at approximately $5.5 billion including debt. This came shortly after rival QXO had offered $95.20 per share. Following the announcement, QXO’s shares climbed 4%, while Home Depot’s dipped 0.6%.
Tech stocks Hewlett Packard Enterprise and Juniper Networks surged 11.7% and 8.4%, respectively, after revealing an agreement with the U.S. Department of Justice that could clear the way for their planned $14 billion merger, pending court approval.
In the bond market, Treasury yields dropped ahead of key economic reports due later this week, including the highly anticipated jobs report scheduled for Thursday, a day earlier than usual due to the Fourth of July holiday. While the job market remains steady overall, hiring has slowed recently. Economists forecast the report will show payroll growth slowing to 115,000 jobs in June, down from 139,000 in May.
This steady but slowing job growth has kept the Federal Reserve on hold regarding interest rates. Fed Chair Jerome Powell has stressed the need to monitor how tariffs affect the economy and inflation before deciding on rate cuts. Lower interest rates can stimulate growth but also risk increasing inflation.
President Trump continues to push for more immediate rate cuts. Two of his Federal Reserve appointees have indicated they might support a rate reduction as soon as the Fed’s upcoming meeting next month.
The yield on the 10-year Treasury note fell to 4.23%, down from 4.29% at the close of trading on Friday.
Across international markets, European stocks slipped slightly, while Asian markets were mixed. Hong Kong’s benchmark index dropped 0.9%, whereas Shanghai’s rose 0.6%, boosted by reports that China’s factory activity saw modest improvement in June. This followed a May agreement between Beijing and Washington to delay higher tariffs on each other’s exports, although manufacturing activity remained in contraction.
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