The S&P 500 and the Nasdaq Composite rose on Monday, boosted by a rally in semiconductor stocks and a report that suggested the incoming Trump administration could adopt a less aggressive tariff stance than expected.
According to preliminary data, the S&P 500 gained 32.96 points, or 0.56%, to end at 5,975.98 points, while the Nasdaq Composite gained 243.30 points, or 1.24%, to 19,864.98. The Dow Jones Industrial Average fell 22.40 points, or 0.05%, to 42,709.73.
Most of the 11 S&P 500 sectors ended lower, but communication services and tech stocks climbed.
"What we're seeing is more of what happened last year, which is a rally concentrated on the largest stocks," said Michael Green, portfolio manager at Simplify Asset Management, adding that flows from 401(k) retirement plans are helping drive stocks higher.
Chipmakers got a boost from Microsoft's plan to invest $80 billion to develop artificial-intelligence-enabled data centers, as well as Foxconn's forecast-beating fourth-quarter revenue.
Nvidia, Advanced Micro Devices and Micron Technology rose. The Philadelphia Semiconductor index jumped.
Tech stocks rose despite benchmark 10-year Treasury yields reaching the highest since May.
U.S. stocks had rebounded sharply on Friday after a string of losses in December and the first few sessions of January, when concerns about high valuations, rising Treasury yields and thin liquidity saw traders pull back after a strong 2024 run.
Automakers Ford and General Motors gained after a newspaper report said President-elect Donald Trump's incoming administration is focused on imposing tariffs on every country, but only certain sectors deemed critical to national or economic security. Trump later refuted the report.
"He did come out and say that he's not going to water down his tariff plan, but the seed has been planted that the Trump administration's tariff policies won't be quite as shocking as people originally feared," said Brian Jacobsen, chief economist at Annex Wealth Management.
Automobile manufacturers are considered the most vulnerable to tariffs imposed on U.S. trade partners, given their vast supply chains.
Leading to Trump's Jan. 20 inauguration, investors are seeking insights into his policies, which are broadly seen as beneficial for corporate America as well as the U.S. economy.
Citigroup moved higher after a bullish rating from Barclays. An index tracking banks rose. Fed Vice Chair for Supervision Michael Barr, who has sought a range of strict rules on the nation's biggest banks, said he will resign.
In a week packed with economic data and speeches from U.S. Federal Reserve officials, investors will look for clues on the pace of monetary policy easing this year. Later in the week, the focus will be on a monthly payrolls report.
While Trump's proposals could boost corporate profits and energize the economy, they also risk driving up inflation. Fed Governor Lisa Cook was the latest among a number of policymakers to caution that inflation risks remain in the new year.
Markets will be shut on Thursday for a national day of mourning to mark the death of former President Jimmy Carter.