S&P 500 posts gains as traders hope for lower tariffs before US President Donald Trump’s August 1 deadline

The S&P 500 edged higher on Monday even after US President Donald Trump threatened high tariffs on more countries over the weekend.

Losses were kept in check as investors bet those duties will eventually be negotiated down and looked ahead to a busy week for the second-quarter earnings season.

The S&P 500 added 0.14 per cent to close at 6,268.56, while the Nasdaq Composite rose 0.27 per cent to settle at 20,640.33. The Dow Jones Industrial Average gained 88.14 points, or 0.20 per cent, ending at 44,459.65.

Investors continue to monitor ongoing updates on the tariff front, after Trump announced Saturday that the U.S. will impose 30 per cent tariffs on the European Union and Mexico starting August 1.

Leaders of the EU and Mexico indicated they intend to keep talking with the Trump Administration this month in an attempt to agree on a lower rate.

The US President’s announcement comes ahead of inflation readings this week, which will give investors a better sense of how the Trump tariffs already in effect are being felt throughout the economy.

Eyes are on a slew of earnings reports set to roll out this week. Major banks, including JPMorgan Chase, will deliver quarterly reports starting Tuesday.

“The big question for markets in the coming weeks is if earnings, which are expected to be solid, can overshadow the tariff issues that are still there in the background,” said Glen Smith, chief investment officer of Texas-based GDS Wealth Management.

“So far, the market has been able to withstand tariff headlines and is more focused on earnings and economic resiliency.”

Another potential factor for investors to monitor is the rift between the Trump Administration and the Federal Reserve.

On Sunday, National Economic Council Director Kevin Hassett told ABC News in the US that Mr Trump can fire Fed Chair Jerome Powell “if there’s cause.”

Trump officials are probing the costs of renovation of the Federal Reserve’s main building in Washington, DC, while the president has repeatedly criticised Mr Powell for not lowering interest rates.

The central bank has pushed back against some of the criticisms of the renovation project.

Monday’s moves come after a negative week for stocks, although the major averages are still near record highs.