The S&P 500 and Nasdaq closed higher, driven by artificial intelligence (AI)-related trading, even as the Federal Reserve's (Fed) short-term monetary policy remained uncertain due to a lack of official US economic data.
Technology firms helped the Nasdaq Composite index post the biggest gains.
However, healthcare companies UnitedHealth Group and Merck fell 2.3% and 4.1% respectively, leaving the Dow Jones index in negative territory.
The rise in market sentiment was also driven by Amazon shares, which jumped 4.0% after the company announced a $38 billion deal with OpenAI to run and scale AI workloads through Amazon Web Services.
Nvidia shares also rose 2.2% after US President Donald Trump announced that the company's most advanced AI chips would be reserved for US firms and would not be exported to China and other countries.
Kimberly-Clark shares fell 14.6% after the consumer goods company said it would buy Tylenol maker Kenvue for more than $40 billion. Kenvue shares rose 12.3%.
The S&P 500 index rose 0.46% to 23,834.72, the tech-focused Nasdaq rose 0.46% to 23,834.72, and the Dow Jones plunged 0.48% to 47,336.68.
In other news, the White House released details of the deal reached by Trump and Chinese President Xi Jinping over the weekend to ease the trade war between the world's two largest economies.
Meanwhile, while official economic data remains limited due to the ongoing government shutdown, the Institute for Supply Management and S&P Global reported their purchasing managers' indexes showing U.S. factories continue to struggle with uncertainty stemming from Trump's tariff policies.
Meanwhile, the US Supreme Court will hear arguments on the validity of tariffs introduced under the Trump administration on Wednesday.
Attention will also turn to the ADP National Employment Index due out on Wednesday, expected to provide a snapshot of the state of the US labor market.
Volume on US exchanges was $19.62 billion, compared to an average of $21.11 billion over the past 20 trading days.
