The S&P 500 and the Nasdaq advanced for a fourth consecutive session Monday, as investors geared up for a slew of mega-cap earnings and a Federal Reserve update on interest rate policy later this week.
Both indexes hit their highest levels in more than a week and registered their longest string of advances since December.
Gains in a handful of mega-cap names did most of the heavy lifting for the S&P 500, with Apple, Microsoft , Alphabet, Broadcom and Meta among the benchmark's top boosts.
Apple, Meta, Microsoft and Tesla are slated to report quarterly results later this week, setting up a key test for a rally powered by euphoria around AI.
Investors will look for signs of measurable payoffs from AI spending. With concerns over high valuations in the tech space, guidance will be especially important and even a modest stumble could spark a rethink about the AI trade.
"You're seeing communications and technology are trading well today in advance of the earnings from a lot of the large companies," said Chris Zaccarelli, chief investment officer of Northlight Asset Management in Charlotte, North Carolina.
"It seems like we're having an expansion in corporate profits and an expansion in the economy, so generally speaking, investors are cautiously optimistic and most likely looking forward to earnings season."
Of the 64 companies in the S&P 500 that had reported earnings as of Friday, 79.7% beat analyst expectations as per data compiled by LSEG.
According to preliminary data, the S&P 500 gained 34.52 points, or 0.50%, to end at 6,950.13 points, while the Nasdaq Composite gained 102.54 points, or 0.44%, to 23,603.78. The Dow Jones Industrial Average rose 307.91 points, or 0.63%, to 49,406.62.
Communications services was the biggest gainer among the S&P 500's 11 major industry sectors during Monday's session while consumer discretionary lagged with a drag from Tesla. The S&P 500 materials sector rose during the session and gold prices vaulted above 5,000 an ounce for the first time, boosting names such as Newmont Corp.
Also on investors' minds was the Fed meeting, which starts on Tuesday and ends with a policy update on Wednesday afternoon. While traders see a more than 97% probability that the central bank will hold rates steady on Wednesday, investors will watch for clues on its future rate path.
But the decision risks being overshadowed by fresh questions over the central bank's independence after the Justice Department opened a probe into Chair Jerome Powell this month, and President Donald Trump said a pick for the next Fed chair could come soon.
Earlier, Chris Larkin at E*Trade from Morgan Stanley said that "Wednesday's Fed announcement will likely keep politics in the headlines."
In individual stocks, shares of chipmaker Intel sank after falling 17% on Friday for their steepest drop in nearly 18 months after the company forecast quarterly profit and revenue below estimates.
Meanwhile, JetBlue lagged as the airline sector dealt with the aftermath of mass disruptions in flight schedules after a massive winter storm hit the Eastern United States.
Shares dropped sharply in prison operators GEO Group and CoreCivic, which have contracts with U.S. Immigration and Customs Enforcement, as Democrats in the U.S. Senate said they will oppose a funding bill for the Department of Homeland Security, which oversees ICE.
The fatal shooting of a 37-year-old nurse, Alex Pretti, in Minneapolis on Saturday by immigration agents prompted a sharp public backlash against Trump's approach to immigration.
Shares of USA Rare Earth rallied after reports that the U.S. administration was taking a 10% stake in the miner as part of a 1.6 billion debt-and-equity investment package.
Among other stock moves, CoreWeave climbed after Nvidia said it would invest 2 billion in the cloud infrastructure firm.
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