Mega-Cap Momentum Pushes Stocks to Fresh Record Highs Amid U.S.-China Trade Optimism

The stock market kicked off the week with strong momentum, extending last week’s gains and driving the major averages to fresh record highs. The S&P 500 rose 1.2%, the Nasdaq Composite added 1.9%, and the Dow Jones Industrial Average advanced 0.7%, as renewed optimism over U.S.-China trade relations and a rally in mega-cap stocks powered the advance.

Investor sentiment got a major boost from weekend reports that Washington and Beijing reached a framework for a new trade deal that would avert a planned 100% tariff on Chinese imports. According to The Washington Post, President Trump and Chinese President Xi are expected to finalize the agreement on Thursday. Treasury Secretary Scott Bessent told CBS News the deal will likely include substantial Chinese purchases of U.S. soybeans, delays in rare earth export controls, and a resolution to outstanding issues over the TikTok partnership — signaling a sharp shift to a more conciliatory tone from both sides after months of friction.

Stocks rallied across the board, with nine of the eleven S&P 500 sectors finishing in positive territory. Mega-cap names led the charge, lifting the communication services (+2.3%), information technology (+2.0%), and consumer discretionary (+1.5%) sectors to the top of the leaderboard. Alphabet rose 3.6% to a record high ahead of its Wednesday earnings report, while Meta Platforms gained 1.7% in anticipation of its own results.

In technology, all of the sector’s largest components advanced at least 1.5%. NVIDIA climbed 2.8% after Secretary Bessent confirmed that U.S. export controls on chips will remain unchanged, while Qualcomm surged 11.1% after unveiling its new AI200 and AI250 accelerator chips — its boldest challenge yet to NVIDIA’s dominance in the AI data center space. AMD added 2.7% after Reuters reported a partnership with the U.S. Department of Energy to develop two supercomputers. The PHLX Semiconductor Index jumped 2.7%, marking one of its strongest sessions this month.

Tesla rebounded 4.3% from Friday’s slide, helping lift the consumer discretionary sector. All seven of the so-called “Magnificent Seven” stocks posted gains of at least 1.2%, with the Vanguard Mega Cap Growth ETF up 1.9%. Five of those companies are set to report earnings later this week, giving investors reason to stay engaged ahead of a potentially volatile stretch.

At the same time, defensives lagged behind. The consumer staples (-0.3%) and materials (-0.3%) sectors both ended lower. Albemarle tumbled nearly 9% after announcing the sale of a majority stake in its refining catalyst unit, and Newmont lost 5.7% as precious metals continued to retreat from record highs. The utilities sector also finished modestly lower, while the real estate group held flat.

Outside the S&P 500, smaller-cap indices joined in the rally, with the Russell 2000 and S&P Mid Cap 400 each adding 0.3% despite fading from early-session highs.

Today’s market action reflected a mix of improving trade sentiment, solid earnings anticipation, and optimism surrounding the Federal Reserve’s upcoming meeting. With President Trump expected to meet President Xi on Thursday and the Fed likely to hint at further policy easing, the bullish tone could carry through the week — provided earnings from the tech giants live up to the lofty expectations driving this latest leg of the rally.

Our FTinvest 11 model portfolio snapped back into positive territory today, rising 0.61% to close at 852.06 after a steady climb that mirrored the broader market’s renewed appetite for risk assets. The index opened on a firm note and maintained upward momentum throughout most of the session, supported by gains across several of its heavyweight components.

Much like the major U.S. benchmarks, FTinvest 11 benefited from improving investor sentiment around trade developments and a stronger tone in growth-oriented sectors. Early buying interest carried the index closer to recent highs before settling below the day’s peak in the final hour of trading.

Today’s performance underscores the portfolio’s resilience amid alternating waves of optimism and caution across global markets. With sentiment improving and volatility easing, FTinvest 11 heads into midweek trading on firmer footing, showing early signs of renewed momentum after a cautious stretch.