US Stocks Climb as Investors Brush Off Fresh Washington Uncertainty

US equities started the week on a positive note Monday, with investors balancing renewed political and trade-related risks out of Washington against an encouraging kickoff to fourth-quarter earnings season.

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At the opening bell, the S&P 500 climbed about 0.3%, supported by gains in materials and utilities shares. Mining companies were among the early standouts, with Freeport-McMoRan Inc. and Newmont Corp. rising as prices for precious metals moved higher. The technology-focused Nasdaq 100 edged up 0.1%, while the Dow Jones Industrial Average also gained roughly 0.3%.

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Market participants remained highly attentive to political developments in Washington, particularly growing concerns around a potential government shutdown and escalating trade rhetoric. Tom Essaye, founder of the Sevens Report, noted that investors are closely tracking headlines tied to fiscal negotiations and trade policy.

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“Attention today will be centered on Washington, given the rising risk of a government shutdown and renewed tariff threats aimed at Canada,” Essaye wrote. He added that any developments making a shutdown more likely—or signaling that tariff threats could actually be implemented—would likely pressure stocks. Conversely, signs of compromise or de-escalation could provide fuel for further market gains.

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Tensions around government funding have increased as Democrats moved to block financing for the Department of Homeland Security. At the same time, several Republican lawmakers are calling for an investigation following the fatal shooting of a protester by federal agents in Minneapolis over the weekend. These developments have added another layer of uncertainty to an already complex political backdrop.

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On the trade front, former President Donald Trump threatened to impose tariffs of up to 100% on Canadian exports should Ottawa proceed with a trade agreement involving China. Despite the sharp language, markets appear skeptical that such measures would ultimately be enacted, given past patterns.

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Emily Bowersock Hill, CEO and founding partner of Bowersock Capital Partners, suggested investors have become increasingly desensitized to aggressive trade rhetoric. She noted that repeated cycles of threats followed by pullbacks have dulled the market’s reaction over time.

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“With each episode that ends in retreat, markets grow more accustomed to the president’s confrontational tone,” Hill said. “As investors become less reactive, the rhetoric itself tends to escalate.”

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From a positioning standpoint, strategists at Deutsche Bank said in a note Monday that overall equity exposure has largely moved sideways. However, they observed a continued rotation within the market, with investors dialing back exposure to mega-cap growth and technology stocks while shifting toward more cyclical areas of the market.

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JPMorgan strategists echoed a similar theme in their latest commentary, pointing out that early earnings reports suggest corporate growth is becoming more evenly distributed across sectors. According to the bank, results so far indicate that earnings momentum is no longer confined solely to big technology firms, a development many investors have been watching closely.

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In individual stock news, shares of USA Rare Earth surged after the Trump administration announced plans to invest in the Oklahoma-based company. The firm, which specializes in magnet minerals, benefited from renewed attention on domestic supply chains and strategic materials.

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Economic data released Monday morning also offered support to equities. Reports on durable goods and capital goods orders both exceeded Wall Street expectations, signaling continued strength in business investment and manufacturing demand. The better-than-forecast data helped offset some of the uncertainty stemming from political headlines.

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Looking ahead, the main focus for markets this week will be the Federal Reserve’s interest-rate decision scheduled for Wednesday. Investors widely anticipate that policymakers will leave rates unchanged, as officials continue to assess inflation trends and the broader economic outlook. Any guidance from the Fed regarding the path of future policy moves, however, could influence market sentiment.

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For now, investors appear willing to look past near-term political risks, drawing confidence from resilient economic data, signs of broadening earnings growth, and expectations that monetary policy will remain steady. As earnings season unfolds and the Fed delivers its latest verdict, markets are likely to remain sensitive to both data surprises and developments from Washington.