The U.S. stock market continued its upward trajectory on Monday, marking the end of a second consecutive winning month.
The S&P 500 index rose by 0.5% as it resumed trading after a remarkable recovery from a significant spring sell-off, which had seen a decline of approximately 20%.
Additionally, the Dow Jones Industrial Average increased by 275 points, or 0.6%, while the Nasdaq composite also climbed by 0.5%.
The market received a positive boost following Canada’s announcement to withdraw a planned tax on U.S. technology firms, alongside a commitment to resume trade discussions with the United States.
Just days prior, President Donald Trump had expressed his discontent regarding the Canadian tax, deeming it “a direct and blatant attack on our country,” and announced the suspension of trade talks with Canada.
A key factor contributing to the swift recovery of U.S. stocks has been the optimism surrounding potential trade deals that President Trump may establish with other countries to reduce his proposed high tariffs.
Concerns remain that a trade war could dampen economic growth and drive inflation higher, putting pressure on market stability.
Currently, many of Trump’s proposed tariffs are on hold, but they are expected to be reinstated in just over a week.
Strategists at Deutsche Bank, including Parag Thatte and Binky Chadha, have cautioned that the resurgence of the U.S. stock market may elevate the possibility of renewed tariff escalations.
They noted a pattern observed in 2018 and 2019 where market rallies prompted tariff escalation, which subsequently led to market declines and later pullbacks on tariffs that sparked new rallies.
“Despite the rhetoric to the contrary, this dynamic looks alive and well,” the strategists stated in their analysis.
They suggested that if tariff-induced negative impacts on economic growth, earnings, or inflation begin to manifest, further concessions may be inevitable.
On Wall Street, Oracle’s stock, which rose 4%, was among the leading contributors to the S&P 500’s gain.
CEO Safra Catz reported a robust start to the company’s fiscal year, highlighting significant cloud services agreements, one of which is projected to generate over $30 billion in annual revenue in two fiscal years.
GMS also saw a notable increase, with its stock jumping 11.7% following the announcement of an agreement to sell itself to a Home Depot subsidiary for $110.00 per share in cash, valuing the company at approximately $5.5 billion, including debt.
Just under two weeks ago, QXO had expressed intentions to acquire GMS at $95.20 per share, leading to a rise of 3.9% in QXO’s stock post-Home Depot’s bid, whilst Home Depot’s stock dipped by 0.6%.
In other corporate news, Hewlett Packard Enterprise (HPE) saw its stock rally by 11.1%, and Juniper Networks climbed by 8.4%, following the announcement of progress on their merger, pending approval from the U.S. Department of Justice.
HPE is in the process of acquiring Juniper for a sum estimated at $14 billion.
Moreover, bank stocks demonstrated solid performance after the Federal Reserve affirmed their financial stability to withstand economic downturns.
JPMorgan Chase’s stock rose by 1%, while Citigroup increased by 0.9%.
The S&P 500 concluded the trading day up by 31.88 points, reaching 6,204.95, with the Dow Jones Industrial Average climbing 275.50 points to 44,094.77, and the Nasdaq composite gaining 96.27 points to reach 20,369.73.
In the bond market, Treasury yields dipped ahead of several major economic reports scheduled for release later in the week.
Anticipation centers on Thursday’s jobs report, which is often viewed as one of the most significant economic indicators each month, especially as it will be released earlier than usual due to the Fourth of July holiday.
Recently, the job market has demonstrated relative stability, even amid tariff-related concerns, although hiring rates have begun to slow.
Economists predict that Thursday’s report will reveal a continued decline in overall hiring, projecting an addition of 115,000 jobs in June, down from 139,000 in May.
This employment data has been pivotal in influencing the Federal Reserve’s current stance on interest rates, with Fed Chair Jerome Powell emphasizing the importance of gathering more information on the impact of tariffs on the economy and inflation before making further rate cuts.
President Donald Trump continues to advocate for aggressive rate cuts, seeking swift action from the Fed.
Recently, two of his appointees to the Federal Reserve suggested that they might consider rate cuts as soon as the next meeting, scheduled for less than a month away.
The yield on the 10-year Treasury note dipped to 4.23% from 4.29% at the end of the previous trading session.
On the international front, stock indexes in Europe showed modest dips following a mixed performance in Asia.
In Hong Kong, stocks fell by 0.9%, while Shanghai’s index rose by 0.6% after China revealed a slight improvement in factory activity for June, correlating with the postponement of higher tariffs by both Beijing and Washington in May, although manufacturing remains in contraction.
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