.png){kind=logo}
The US stock market opened higher on Monday as investors weighed fresh policy and trade risks against a strong start to fourth-quarter earnings. Gains held through late morning as traders watched Washington headlines and positioned for the Federal Reserve rate decision due Wednesday.
The S&P 500 rose 0.6% by 11 a.m. New York time, while the Nasdaq 100 added 0.6%. The Dow Jones Industrial Average climbed 0.4%, and the MSCI World Index advanced 0.7%, signaling broad risk appetite across major regions.
Equities extended their January advance as results and guidance helped steady sentiment. Analysts said early reports suggest earnings growth may broaden beyond the mega-cap technology group that dominated returns in recent years.
JPMorgan Chase & Co. strategists said forward guidance has topped expectations at roughly half of the S&P 500 companies that have provided an outlook for 2026. Since many of the early reporters sit outside the technology sector, the figures point to a wider base of growth.
Goldman Sachs Group Inc. strategists also expect earnings to support market breadth. They forecast stronger economic growth in the first half of 2026, which could favor smaller, more cyclical stocks relative to the largest firms.
Still, performance has not been uniform across the market. The Russell 2000 Index fell 0.2%, even as large-cap benchmarks moved higher. Traders continued rotating between sectors as they assessed rates, growth, and policy risks.
Policy headlines remained a key driver. The risk of a US government shutdown increased as Democrats and Republicans clashed over funding and broader priorities. Democrats pushed to strip funding for the Department of Homeland Security, while some Republicans called for an investigation after federal agents shot and killed a protester in Minneapolis over the weekend.
In addition, former President Donald Trump threatened Canada with 100% tariffs on its exports if it proceeds with a trade deal with China. Investors continued to discount the likelihood of follow-through, although the threat heightened uncertainty around cross-border trade.
Tom Essaye, founder of the Sevens Report, said markets will respond quickly to developments that raise or lower the odds of a shutdown. He wrote that escalation could weigh on risk assets, while signs of de-escalation could support a rebound.
Currency markets reflected the shift in risk positioning. The Bloomberg Dollar Spot Index fell 0.6%, while the euro rose 0.6% to $1.1895 and the British pound gained 0.5% to $1.3707. The Japanese yen strengthened 1.2% to 153.76 per dollar.
Defense shares stayed in focus ahead of major earnings reports. An index of aerospace and defense stocks gained 42% last year, fueled by expectations of higher government spending on military technology and sustained geopolitical tensions.
Investors now want confirmation that demand will match the optimism embedded in valuations. Contractors, including Lockheed Martin Corp., L3Harris Technologies Inc., Northrop Grumman Corp., and RTX Corp., are scheduled to report this week and offer guidance for the year ahead.
Analysts said valuations across the group look mixed after the rally. Lockheed and General Dynamics trade at 20 and 21 times estimated profits over the next 12 months, respectively, which remains below the S&P 500’s valuation. RTX and L3Harris trade at valuation multiples of about 30 times earnings.
Still, risks remain. The Golden Dome program, an ambitious missile defense initiative often cited by bullish investors, does not yet exist as a functioning technology. Experts have also questioned whether the administration’s timeline appears realistic. Any major jump in defense spending would also require congressional approval.
NVIDIA Corp. invested an additional $2 billion in CoreWeave Inc. to expand AI computing capacity by 2030.
NVIDIA also introduced open-source software and models for AI weather forecasting systems.
Apple Inc. launched an upgraded AirTag with a longer range and a louder speaker.
Merck & Co. is no longer in talks to acquire Revolution Medicines Inc. after price disagreements.
Goldman Sachs Group Inc. returned to the US dollar bond market after a $16 billion sale.
USA Rare Earth Inc. signed a non-binding agreement with the Commerce Department for $1.6 billion in funding.
IonQ Inc. agreed to buy SkyWater Technology Inc. in a deal valuing the chipmaker at about $1.8 billion.
Airbus SE told employees to prepare for a turbulent year amid global tensions.
Abu Dhabi National Oil Co. increased its stake in the Rio Grande LNG project in Texas.
The week’s main test arrives on Wednesday with the Federal Reserve rate decision. Investors expect officials to hold rates steady, and attention will turn to Chair Jerome Powell’s messaging on the path ahead. Meanwhile, earnings from large companies later this week could determine whether the early push toward broader market leadership continues.
Also Read: UK Recession Risk Grows as Trump Tariffs Threaten Trade as Global Tensions Persist
Commodities delivered some of the biggest moves. Spot gold climbed 2.1% to $5,093.38 an ounce, pushing through the $5,000 level for the first time in the session. The rally lifted miners, with Freeport-McMoRan Inc. and Newmont Corp. among the stronger performers.
