The S&P 500 closed at an all-time high Monday, with investors cheered by the prospects of another interest rate cut this week by the Federal Reserve and hopes for a trade deal between the U.S. and China.
The index added 17 points, or 0.6%, to end at 3,039, topping the previous high of 3,027 on July 26. The Dow and tech-heavy Nasdaq indices also rose.
The Trump administration and China are close to finalizing sections of a preliminary trade deal, the Office of the U.S. Trade Representative said Friday, according to CNBC.
"Our expectations are for continued progress in the trade talks, notwithstanding some room for episodes of 'two steps forward, one step back' in the process," analysts with Oppenheimer Asset Management said in a client note.
The 15-month trade war between the world's two biggest economic powers hasand resulted in 300,000 fewer jobs being created, Moody's Analytics said last month.
Signs of progress in trade negotiations may boost investor sentiment this week, analysts said.
"U.S. stocks seem poised to breakout to fresh record highs this week as both Chinese and US officials signal the phase-one deal is close to being done," said Edward Moya, senior market analyst for foreign-exchange firm OANDA, in a research note.
He added, "Stocks could also be supported on expectations Fed Chair Powell will deliver a third consecutive [rate cut] and remain data-dependent if more are warranted."
On Friday, the S&P 500 closed within 0.1% of its July high. Investor attention has shifted to corporate earnings as tension eased after Washington and Beijing resumed negotiations.
There's also a historical precedent for a late October rally, notes Ryan Detrick, senior market strategist for LPL Financial.
"October 28th is historically the best day of the year for stocks," Detrick said in a client note on Monday. "It kicks off the best six months of the year (November-April) and says goodbye to the worst six months Lastly, the last few days of October to the first few days of November is one of the strongest times of the year."
— With reporting by The Associated Press.