(Reuters) - The S&P 500 and Nasdaq scaled new heights on Monday, as optimism over the U.S. striking trade deals with its key partners fueled the bullish momentum that has kept indexes on track for gains this quarter.

The Nasdaq, S&P 500 and Dow Jones have gained 17.5%, 10.2% and 4.6% so far in the quarter, touching and then retreating from record levels since late last year, partly because of headlines around President Donald Trump's rapid policy changes.

The three indexes are still set for their weakest first-half performances since 2022, as the resulting uncertainty around policy has kept investors wary.

The blue-chip Dow remains 2.3% below its record closing high reached on December 4.

On Monday, the benchmark S&P 500 and the tech-heavy Nasdaq Composite extended their record run from last week, on bets of deeper U.S. interest rate cuts and renewed optimism around AI.

Investor focus is now on a July 9 deadline for countries to reach deals with the United States or see tariffs spike higher, but Trump has said he could extend the tariff deadline or "make it shorter".

Canada on Sunday scrapped its digital services tax targeting U.S. tech firms, just hours before it was due to take effect, in a bid to advance stalled trade negotiations with the United States.

"We've got this deadline coming, but then Trump has said that the deadline can be moved. And then you've got markets thinking that the Fed could potentially cut interest rates sooner than later. So there are a lot of drivers here," said Dennis Dick, at trader at Triple D Trading Inc.

"Investors are just confident here in this market right now, because we've had some bad news come in, even some bad earnings reports, and they buy the stocks right back. So bulls remain in complete control."

Investors are also looking into economic data and fiscal policy developments to see if the latest bull run in U.S. stocks can continue.

U.S. Senate Republicans will try to pass Trump's sweeping tax-cut and spending bill, despite divisions within the party about its expected $3.3 trillion hit to the $36.2 trillion national debt. Trump wants the bill passed before the July 4 Independence Day holiday.

Key economic data releases this week include monthly non-farm payrolls and the Institute for Supply Management's survey on manufacturing and services sectors for June.

Several U.S. central bank officials including Federal Reserve Chair Jerome Powell are scheduled to speak later this week.

A raft of soft economic data and expectations that Trump will replace Powell with someone dovish have pushed up bets of rate cuts from the Fed this year.

At 09:59 a.m. ET, the Dow Jones Industrial Average rose 178.68 points, or 0.41%, to 43,998.06, the S&P 500 gained 14.13 points, or 0.23%, to 6,187.20 and the Nasdaq Composite gained 44.64 points, or 0.22%, to 20,318.10.

Shares of big U.S. banks rose after most cleared the Federal Reserve's annual "stress test", paving the way for billions in stock buybacks and dividends.

Shares of Bank of America edged up 0.8%, while rivals JPMorgan Chase and Wells Fargo added 1.5% and 1.9%.

Juniper Networks rose 8.3% after the U.S. Justice Department settled its lawsuit challenging server maker Hewlett Packard Enterprise's all-cash acquisition of the networking gear maker for $14 billion.

Hewlett Packard Enterprise shares soared 9.6%.

Shares of Oracle rose 6.4% after the company said the new cloud services agreement is expected to contribute more than $30 billion to annual revenue starting in fiscal year 2028.

The S&P 500 posted 25 new 52-week highs and no new lows while the Nasdaq Composite recorded 61 new highs and 37 new lows.

Advancing issues outnumbered decliners by a 1.56-to-1 ratio on the NYSE, while by a 1.7-to-1 ratio on the Nasdaq.

(Reporting by Sruthi Shankar and Nikhil Sharma in Bengaluru; Editing by Devika Syamnath)