Stock market today: S&P 500 ends Q2 with hefty gains as trade war fears cool

Investing.com-- The S&P 500 closed higher Monday, to cap for strong gains for the second quarter as fears over global trade wars recede and bets on sooner rate cuts heat up.    

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average traded 275 points, or 0.6%, higher, the S&P 500 index gained 0.5% to clinch record of close of 6,204.35. The NASDAQ Composite rose 0.5%.

All three benchmark indices are on course for hefty gains this month, helped by the announcement of a trade agreement between the U.S. and China, lifting hopes that trade agreements could be reached before President Trump’s July 9 deadline.

This was augmented Monday by the news that Canada has rescinded its digital services tax on tech businesses mere hours before it was due to take effect, as Ottawa pushes to revitalize stalled trade negotiations with the Trump administration.

U.S. President Donald Trump used the tax as a motive last week for terminating trade discussions with Canada, but Prime Minister Mark Carney and Trump will now hold talks with the goal of reaching a trade deal by July 21, Canada’s finance ministry said.

Meta climbs on AI optimism; Oracle announces new deal wins; Robinhood leans into crypto   

Meta Platforms Inc (NASDAQ:META) rose 0.6%, driven by AI optimism as investors digested media reports suggested that company has hired four AI researchers from OPenAI to join its Superintelligence group. 

Oracle Corporation (NYSE:ORCL), meanwhile, climbed 4% after announcing that it had signed multiple deals to provide services to large cloud providers, with one of the agreements expected to bring in more than $30B in annual revenue from 2028.  

Robinhood Markets Inc (NASDAQ:HOOD) surged more than 12% to record highs as investors continue to bet on strong growth ahead after the company announced a slew of new crypto-related offerings that will be launched on the platform for users to trade.

Fed to cut by September?

Markets had also advanced last week on rising expectations of a Federal Reserve rate cut, spurred by weaker-than-expected inflation data.

A personal consumption expenditures report showed that consumer spending unexpectedly declined in May, while the inflation rate stubbornly above the Federal Reserve’s 2% target. The figures bolstered hopes for potential interest rate reductions from the central bank.

The removal of the threat of potentially inflationary tariffs could be the final catalyst the U.S. Federal Reserve needs to cut interest rates once more.

Fed Chair Jerome Powell’s testimony to U.S. Congress last week was seen as somewhat dovish after he said rate cuts were likely if inflation did not spike this summer because of tariffs.

Financial markets have now priced in a roughly 74% probability that the Fed will slash rates as soon as its September, although there is still a smaller chance that the next reduction comes at its next gathering in July.

The nonfarm payrolls report for June, due out on Thursday with Friday being a U.S. holiday, is the next major economic data release, with economists anticipating that a total of 120,000 jobs were added during the month, inching down from 139,000 in May.

Trump’s tax cut bill advances in Senate

The Senate on Saturday narrowly approved a 51–49 procedural vote to open debate on Trump’s comprehensive “One Big Beautiful Bill,” combining tax cuts, domestic spending changes, and border security provisions

The bill’s advancement sets up a high-stakes week of legislative maneuvering, beginning with up to 20 hours of debate.

According to a Congressional Budget Office (CBO) estimate, the Senate’s version of the bill would add approximately $3.3 trillion to the federal deficit over the next decade.

Despite Senate Republicans aiming to wrap up the process before the July 4 holiday, the bill faces further hurdles in the House, where members have raised objections to the deficit impact and rushed timeline. 

The Republican-controlled U.S. House of Representatives passed its version of the bill last month.

(Pete Nurse, Ayushman Ojha contributed to this article)