- Senate Republicans managed to narrowly pass a bill to revamp the country's tax system on Saturday.
- The Dow posted intraday and closing record highs.
- But the rest of the market closed lower, however, as a sharp decline in tech pressured the S&P 500 and Nasdaq composite.
The Dow Jones industrial average notched a record closing high on Monday after the Senate narrowly passed a major tax bill over the weekend.
The 30-stock index rose 58.46 points to 24,2940.05, with Walt Disney and Boeing leading advancers. The Dow also hit an intraday record and rose more than 300 points at its session high.
But the rest of the market closed lower, however, as a sharp decline in tech pressured the S&P 500 and Nasdaq composite.
The closed 0.1 percent lower at 2,639.44, as information technology fell nearly 2 percent. The index had gained 0.87 percent at its session high, marking the first time since Feb. 10, 2016 the S&P 500 gave up such a gain.
The Nasdaq composite lagged, sliding 1.1 percent to 6,775.37 as Facebook, Alphabet and Netflix all finished lower.
"You're seeing tech lagging and financials leading. This is some rotation on the back of the Senate vote," said Lindsey Bell, investment strategist at CFRA.
In the early hours of Saturday morning, Senate Republicans managed to narrowly pass a bill to revamp the country's tax system. The final vote came out as 51-49 in favor, after Republicans had to rework the bill late on Thursday.
"Everyone who owns stock is happy with the tax bill vote," said Trip Miller, managing partner at Gullane Capital Partners. "Net-net, this is good news for Corporate America."
The GOP, however, still need to overcome future obstacles in order for the Senate and the House to craft a joint bill, which will then be presented to President Donald Trump. Republicans hope a deal will be achieved by Christmas.
"Investors this week will look to see progress between the House and Senate's joint bill," said Nicholas Colas, co-founder of DataTrek Research. "Both chambers still have to reconcile differences between their bills, such as implementing corporate tax cuts immediately or in 2019."
Bank stocks rose broadly, with the SPDR S&P Bank exchange-traded fund (KBE) surging 1.7 percent. Goldman Sachs, Bank of America and JPMorgan all rose.
U.S. stock index futures had also risen sharply before the open on Monday. Dow futures briefly traded more than 250 points higher.
While the tax bill was supposed to dominate sentiment in the previous trading session, markets closed lower on Friday after having been taken on a roller coaster ride.
U.S. stocks finished in the red Friday after a report emerged stating that former national security advisor Michael Flynn was directed by Trump to talk to Russians.
ABC News had initially reported on Friday, citing an unnamed source, that Flynn was getting ready to testify that he made proposals to the Russian ambassador at Trump's request, during the run-up of the 2016 U.S. election. The media outlet went on to correct the report, stating that Flynn would likely say that Trump's instructions had occurred after the election took place.
Shifting to corporate news, CVS Health said it will buy Aetna, a U.S. health insurer, for $69 billion. The agreement is seen as one of 2017's biggest deals so far in the merger and acquisition (M&A) space. CVS shares slipped 4.6 percent, while Aetna declined 1.4 percent.
The Wall Street Journal also reported that a deal by Disney to buy some of 21st Century Fox's assets is "gaining momentum," despite speculation that the conversation between the two parties had cooled off. Disney shares rose 4.7 percent, while Fox shares gained 2.8 percent.
In commodities, oil cartel OPEC and non-OPEC producing nation Russia agreed to limit their production output through to the end of next year. While oil price rose on the back of the news last week, prices are trading in the red Monday, following news that U.S. shale drillers had added more rigs in the previous week.
—CNBC's Jacob Pramuk and Javier E. David contributed to this report