Stocks notched new record closing highs to start Fed week as market participants cheered encouraging U.S.-China trade headlines. A big rally in tech stocks ahead of this week's onslaught of mega-cap earnings also helped start the week on a high note.
At the close, the Dow Jones Industrial Average was up 0.7% at 47,544, the S&P 500 was 1.2% higher at 6,875, and the Nasdaq Composite had gained 1.9% to 23,637 – new record highs for all three indexes.
Over the weekend, reports emerged that the U.S. and China have hashed out a framework for a trade deal. On Thursday, President Donald Trump is expected to meet with Chinese President Xi Jinping at the APEC summit in South Korea.
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"I believe that we have the framework for the two leaders to have a very productive meeting for both sides," U.S. Treasury Secretary Scott Bessent said on NBC's Meet the Press Sunday.
The negotiations reportedly included export controls, reciprocal tariff extensions and TikTok. "Investors are enthusiastic that leaders from both sides are setting the stage for a treaty, which is sparking risk-on sentiments in markets," says José Torres, senior economist at Interactive Brokers.
Apple, Microsoft near $4 trillion market cap
Ahead of their respective turns on the earnings calendar later this week, both Apple (AAPL, +2.3%) and Microsoft (MSFT, +1.5%) neared a $4 trillion market valuation. Currently, Nvidia (NVDA, +2.8%) is the only company that has a $4 trillion market cap, having surpassed this level in July.
Apple is close, though, and ended Monday with a $3.989 trillion market capitalization. The iPhone maker will disclose its fiscal fourth-quarter results after Thursday's close.
"Looking to the fourth quarter, one of the most important areas for investors will be Apple's forward guidance on revenue growth, especially in light of ongoing tariff pressures and uncertainties around its AI strategy," says Matt Britzman, senior equity analyst at Hargreaves Lansdown.
And ahead of its Wednesday evening earnings event, Microsoft finished today with a $3.951 trillion market valuation.
Bernstein analyst Mark Moerdler likes the setup on MSFT ahead of its fiscal Q1 earnings. "We think Azure could accelerate further, hitting 40% year-over-year growth vs guidance of 37%. Momentum in Copilot adoption and benefit from Windows-10 end of life will also contribute to overall strong revenue growth."
Overall, it's been a strong start to the earnings season, but as Daniela Sabin Hathorn, senior market analyst at Capital.com, warns: "The market has become less forgiving," and "recent high-profile names sold off despite respectable prints. With valuations elevated, guidance matters as much as results."
Qualcomm soars on new AI chip
Elsewhere in the Big Tech space, Qualcomm (QCOM) stock surged 11.1% Monday after the company said it is launching its own artificial intelligence (AI) chips – creating new competition for Nvidia and Advanced Micro Devices (AMD, +2.7%).
Qualcomm said that its AI200 chip will go on sale starting next year, while its AI250 chip will be available in 2027.
"Both solutions feature a rich software stack and seamless compatibility with leading AI frameworks, empowering enterprises and developers to deploy secure, scalable generative AI across data centers," the company said in its press release.
Wall Street will be looking for more details on Qualcomm's new AI chips when the company reports fiscal fourth-quarter earnings after next Wednesday's close.
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