NEW YORK — Wall Street kicked off the week on a confident note Monday, with major U.S. stock indexes extending their record-breaking rally ahead of a series of pivotal developments expected to shape market sentiment in the days ahead.
By midmorning, the S&P 500 was up 0.8%, continuing its remarkable climb from April’s lows. The Dow Jones Industrial Average gained 210 points, or 0.4%, while the Nasdaq composite surged 1.3%, driven by renewed optimism surrounding global trade diplomacy, the Federal Reserve’s interest rate policy, and another wave of high-profile earnings reports from the tech sector.
The latest leg of the rally reflects investors’ growing confidence that Washington and Beijing could make progress toward stabilizing trade relations when President Donald Trump meets Chinese leader Xi Jinping on Thursday. The two are expected to discuss a new “framework” for economic cooperation, according to U.S. Treasury Secretary Scott Bessent, who said negotiators had made “encouraging headway” over the weekend.
Trump, speaking briefly to reporters before heading to the White House, sounded upbeat about the talks. “We feel good about where we are,” he said. “There’s a real chance to bring more balance and fairness to our trade relationship.”
Markets Brace for a High-Stakes Week
The meeting between Trump and Xi is just one of several catalysts that could determine whether the market’s stunning rally has more room to run. Since April, the S&P 500 has jumped an extraordinary 37%, propelled by hopes of easing trade tensions, expectations for continued rate cuts by the Federal Reserve, and resilient corporate earnings that have so far defied economic headwinds.
Investors are now watching closely as the Fed prepares to announce its latest interest rate decision on Wednesday. The consensus on Wall Street is that the central bank will deliver another quarter-point cut, marking its second consecutive reduction in borrowing costs. Policymakers have signaled they want to support a labor market that’s shown signs of slowing while cushioning the broader economy from lingering tariff-related disruptions.
However, there’s also caution in the air. The Fed has repeatedly warned it could reverse course if inflation — which remains elevated — begins to accelerate again. Lower rates can sometimes amplify inflationary pressures by stimulating borrowing and spending, and recent data has offered a mixed picture.
The government’s latest inflation report came in slightly better than expected, raising hopes that price pressures may be cooling, but economists fear that the ongoing federal government shutdown could delay key data releases and complicate the Fed’s policy outlook in the weeks ahead.
Corporate Earnings in Focus
Beyond monetary policy and geopolitics, this week’s market narrative will be shaped by corporate America’s earnings parade — especially from Big Tech, whose influence over market direction has never been greater.
Keurig Dr Pepper shares climbed 4.9% on Monday after the beverage giant reported quarterly profits that matched Wall Street’s expectations. Executives credited higher prices for its K-Cup coffee pods and solid demand for brands like Canada Dry and Green Mountain Coffee for the stronger performance.
The real test, however, will come midweek, when several of the market’s most valuable and influential companies unveil their results. Alphabet (Google’s parent company), Meta Platforms, and Microsoft are all slated to report Wednesday, followed by Amazon and Apple on Thursday.
Together, those five companies account for nearly a quarter of the S&P 500’s market capitalization, meaning even modest surprises in their earnings or guidance could sway the broader market. Analysts will be paying particular attention to spending on artificial intelligence (AI), a sector that has driven massive capital investment and investor enthusiasm — and raised fresh concerns about the formation of a speculative bubble reminiscent of the dot-com era.
“AI has fueled much of the market’s recent optimism,” said Julia Mancini, senior equity strategist at Orion Advisors. “But when valuations stretch this far, expectations become almost impossible to meet. The next few days will reveal whether this rally is built on fundamentals or faith.”
Global Markets Mirror U.S. Optimism
The rally wasn’t limited to Wall Street. Across Asia, stocks surged ahead of the Trump–Xi summit, reflecting optimism that any thaw in U.S.-China relations could bolster global trade.
Shanghai’s composite index climbed 1.2%, Hong Kong’s Hang Seng gained 1%, while Japan’s Nikkei 225 jumped 2.5% — its best single-day performance in over two months. In South Korea, the Kospi advanced 2.6%, buoyed by gains in technology and semiconductor shares.
European markets, by contrast, traded mostly flat as investors digested the overnight moves in Asia and awaited signals from both the Fed and the European Central Bank on monetary policy direction.
In the bond market, yields were steady. The 10-year Treasury note held at 4.02%, unchanged from late Friday, suggesting that traders are taking a “wait and see” approach ahead of the Fed’s rate decision.
A Rally with Risks
Despite the upbeat mood, many analysts caution that the market’s momentum may be difficult to sustain without tangible progress on multiple fronts. A disappointing outcome from the Trump–Xi meeting, a more hawkish stance from the Fed, or weaker-than-expected corporate earnings could each trigger a sharp reversal.
“The market is priced for perfection right now,” said Tom Caldwell, chief investment officer at Meridian Capital Partners. “You’ve got optimism about trade, optimism about rates, optimism about AI — but if even one of those pillars wobbles, the correction could be swift.”
Still, for now, investors appear willing to bet that the economic and political stars will align — at least for a while longer. The resilience of U.S. consumers, steady corporate profits, and a central bank still inclined toward support have combined to create one of the most powerful market rallies in modern history.
If those forces continue to hold, this could be another record-breaking week for Wall Street — a week defined by hope, high stakes, and the ever-present question of just how long the good times can last.