Rising mega-cap stocks like Apple and Tesla led the tech-heavy Nasdaq to a big gain on Monday. The Dow and S&P 500 also posted modest gains amid soft holiday activity.
Investors are looking ahead to U.S. labor market data later this week to gauge the outlook for interest rates. Apple (AAPL.O) rose 2.9%, Microsoft (MSFT.O) gained 2% and Amazon.com (AMZN.O) gained 2.2%, helping to lift the Nasdaq.
"The main driver of earnings growth is GDP, and we continue to view the economy as very healthy," said Ben Snyder, senior equity strategist at Goldman Sachs Research.
"We expect U.S. economic growth to be above average this year, above 2%, supporting strong underlying earnings. Beyond GDP, profitability appears to be recovering after a few tough years."
He added that a quarter of the S&P 500's gains come from the biggest tech companies, which are also showing strength.
Carmaker Tesla (TSLA.O) shares rose 6.1% ahead of its second-quarter vehicle delivery data.
Wells Fargo added Tesla to its "tactical ideas list" for the third quarter, though it maintained an "underweight" rating, citing concerns about slowing supply growth and potential price weakness.
Semiconductor maker Advanced Micro Devices (AMD.O) fell 2.8% and Arm Holdings fell 2.9%. That pushed the Philadelphia SE Semiconductor Index (.SOX) to a one-week low.
Real estate stocks (.SPLRCR), often seen as a proxy for bonds, fell nearly 1% as U.S. Treasury yields rose to multi-week highs. However, rising yields often favor banks, pushing the S&P 500 Banks Index (.SPXBK) to its highest level in more than a month.
Shares of JP Morgan Chase (JPM.N) hit a record high after the largest U.S. bank on Friday announced it would raise its dividend to $1.25 per share from $1.15. The board also approved a $30 billion share buyback, effective July 1.
Shares of Chewy (CHWY.N) fell 6.7%, despite a sharp early rally, after prominent stock analyst Keith Gill, also known as "Growling Kitty," disclosed a 6.6% stake in the pet retailer.
Trading volumes were light as the stock market prepared to close Thursday for the Independence Day holiday. Trading volume on U.S. exchanges totaled 10.59 billion shares, compared with an average of 11.89 billion over the past 20 trading days. Trading activity was expected to be light throughout the week.
June manufacturing PMI data from the Institute for Supply Management showed output contracting for a third straight month and prices paid for materials falling to a six-month low, an encouraging sign in the Federal Reserve's fight against inflation.
Traders continue to expect about two interest rate cuts this year, starting in September, according to LSEG FedWatch.
There are also key economic data releases this week, with JOLTS job openings on Tuesday, ADP employment, factory orders, ISM services PMI and the minutes of the Fed's latest policy meeting on Wednesday. Nonfarm payrolls are due on Friday.
New York Fed President John Williams said he believes pressure on prices is easing and returning to the 2% target.
The Dow Jones Industrial Average (.DJI) added 50.66 points, or 0.13%, to end the day at 39,169.52. The S&P 500 (.SPX) rose 14.61 points, or 0.27%, to 5,475.09, and the Nasdaq Composite (.IXIC) rose 146.70 points, or 0.83%, to 17,879.30.
On the NYSE, decliners outnumbered gainers 1.87 to 1. The New York Stock Exchange posted 162 new highs and 99 new lows.
The S&P 500 posted 13 new 52-week highs and four new lows, while the Nasdaq Composite posted 45 new highs and 157 new lows. The Nasdaq and S&P 500 posted their third straight quarterly gains on Friday, the first in three years for the tech-heavy index.
However, the Dow's quarterly decline has raised concerns about the need for investors to diversify.
Global stocks rose in choppy trading on Monday, with U.S. Treasury yields rising after France's historic election and expectations of a slew of economic data this week that could shed light on the likelihood of a Federal Reserve rate cut.
In France, the far-right won less support than expected in the first round of voting, pointing to the possibility of a hung parliament that could make it harder to implement the party's agenda. European stocks (.STOXX) ended the day up 0.31%, while the euro gained 0.13% after the election.
Investors will be closely watching Fed Chairman Jerome Powell speak on Tuesday, followed by minutes from the Fed's latest policy meeting on Wednesday and U.S. nonfarm payrolls data due on Friday. In June, the Fed had forecast only one rate cut in 2024.
"The French election results were better than expected and sometimes the right strategy matters," said Wasif Latif, president and chief investment officer at Sarmaya Partners.
"This week will be important for payrolls, even if they are cut, which could lead to tighter liquidity heading into the weekend," Latif added.
The MSCI World Equity Index (.MIWD00000PUS), which tracks shares in nearly 50 countries, rose 0.26% after initial losses. In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) ended unchanged.
The yield on 10-year U.S. Treasury notes rose to their highest since mid-June at the start of a holiday-shortened week that is likely to be characterized by light trading volumes. The yield on bonds reached 4.4692%.
Oil prices rose 2% to a two-month high on hopes for a pick-up in demand during the Northern Hemisphere summer driving season and concerns that the conflict in the Middle East could spread and squeeze global supplies.
Brent crude futures rose 1.9% to $86.60 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 2.3% to $83.38 a barrel. It was Brent's highest close since April 30 and WTI's highest since April 26.
Foreign exchange markets also saw significant moves, with the dollar hitting a fresh 38-year high against the yen, rising to 161.72 yen, a level not seen since 1986. The dollar index rose 0.1% to 105.82. It was initially lower after Institute for Supply Management data released Monday showed U.S. manufacturing contracted for a third straight month in June.
Gold prices also rose. Spot gold rose 0.28% to $2,332.29 an ounce, while U.S. gold futures rose 0.09% to $2,329.70 an ounce.