Wall Street posted modest gains on Monday (Tuesday AEST) as investors expressed cautious optimism that looming tariffs proposed by United States President Donald Trump could be moderated before taking effect.
Despite heightened trade rhetoric over the weekend, sentiment remained buoyant ahead of key inflation data and the kickoff of second-quarter earnings season.
The Dow Jones Industrial Average rose 88.1 points, or 0.2%, to finish at 44,459.7. The S&P 500 added 0.1%, closing 8.8 points higher at 6,268.6, while the tech-heavy Nasdaq Composite advanced 54.8 points, or 0.3%, to 20,640.3.
The gains came after Trump announced Saturday that the U.S. would impose 30% tariffs on goods from the European Union and Mexico starting 1 August.
However, investor nerves were calmed somewhat as both E.U. and Mexican officials signalled they would continue negotiations with the White House in the hope of securing a lower tariff rate before the deadline.
The market’s focus is now turning to a packed earnings calendar and crucial inflation data due later this week, which could offer fresh clues about the broader economic impact of the tariffs already in place.
Several major banks, including JPMorgan Chase, are set to report second-quarter results during Tuesday's U.S. session, potentially setting the tone for the rest of the earnings season.
Strong corporate earnings could help offset some of the macroeconomic uncertainties stemming from trade policy and central bank tensions.
Adding to the political intrigue, the relationship between the Trump administration and the Federal Reserve remains strained. On Sunday, National Economic Council Director Kevin Hassett told ABC News that President Trump could remove Fed Chair Jerome Powell “if there’s cause”, reigniting speculation over the central bank’s independence.
Meanwhile, administration officials have launched a review into the renovation costs of the Federal Reserve’s Washington, D.C. headquarters, as the central bank’s inspector general reportedly begins an internal investigation into the project.
On the bond markets, yields moved slightly higher. The 10-year Treasury note rose 0.4% to yield 4.437%, while the 2-year note increased 0.3% to 3.904%.
