The S&P 500 rose on Monday as traders monitored political developments and braced for a big week of key earnings reports as well as the latest Federal Reserve interest rate decision.
The broad market index advanced 0.50% to end at 6,950.23. The Dow Jones Industrial Average gained 313.69 points, or 0.64%, and settled at at 49,412.40. The Nasdaq Composite climbed 0.43% and closed at 23,601.36. The tech-heavy index was supported by jumps of about 3%, 2% and 1% in Apple, Meta Platforms and Microsoft, respectively, ahead of their earnings reports later in the week.
President Donald Trump over the weekend threatened to slap a 100% tariff on goods coming into the U.S. from Canada if the country makes a trade deal with China. Canadian Prime Minister Mark Carney said in response that Ottawa has "no intention" of pursuing a free trade deal with Beijing.
"The situation remains very fluid. No one seems particularly worried about Trump's 100% Canadian tariff threat coming to fruition (especially since Canadian officials, including Carney, insist the country isn't negotiating a free trade deal with China), but the constant wielding of import taxes as a cudgel to pressure allies is still slowly eroding sentiment," said Adam Crisafulli of Vital Knowledge.
Investors were keeping an eye on Washington, as growing outrage over federal immigration agents fatally shooting a U.S. citizen in Minnesota for the second time this month generated concerns of a potential U.S. government shutdown. Several Democratic senators said they would not approve a $1.2 trillion funding package if it includes an allotment for Homeland Security. One person familiar with Senate GOP leadership said funding for DHS would not be removed, however.
Gold prices rallied on Monday as investors sought safety amid the rising political and fiscal risks, with the metal reaching a new all-time high and briefly surpassing $5,100 per ounce.
"Irrespective of a lot of geopolitical uncertainty and policy uncertainty, consumers still look like they're in okay shape and continue to spend money, and businesses look like they're doing well profitability wise and still investing those profits in AI and other productivity tools," said Tom Hainlin, national investment strategist at U.S. Bank Asset Management Group.
More than 90 S&P 500 companies are set to post quarterly reports this week. A few of the "Magnificent Seven" names are on the docket — Meta, Tesla and Microsoft are all due out Wednesday, while Apple is scheduled to report on Thursday. So far, the earnings season has been strong, with 76% of the companies that have reported beating expectations, per FactSet.
To be sure, some stocks have still seen losses this season despite companies topping expectations, such as Intel and Netflix.
"We'll start to broaden out the distribution of information beyond the financial sector and beyond airlines into a more broader read on the economy, and our expectation is that we think it's still going to shape up to be a decent earnings season," Hainlin added.
On the economic front, the Fed is slated to announce its first policy decision of the year on Wednesday. While the central bank is widely expected to keep its overnight rate unchanged, the market will look for clues on when its officials will cut rates, as traders are betting on two quarter percentage point cuts by the end of 2026, according to the CME FedWatch Tool.
Wall Street is coming off a losing week after increasing geopolitical tensions unnerved investors. Concerns eased toward the end of the week, with Trump announcing that a "framework" for a deal regarding Greenland had been reached. Still, the S&P 500 lost about 0.4% last week for its second straight weekly decline.
