The Dow Jones Industrial Average posted its fourth straight gain on Monday amid more optimism around U.S.-China trade relations. However, losses in tech shares kept the index's gains in check.
The 30-stock Dow rose 38.05 points, or 0.2% to close at 26,835.51. The S&P 500, meanwhile, closed just below breakeven at 2,978.43 to end a three-day winning streak. The Nasdaq Composite slid 0.2% to 8,087.44. Small-cap stocks outperformed, as the Russell 2000 climbed 1.3% to 1,524.23 to post its third gain in four sessions.
Caterpillar was the biggest contributor to the Dow's gains, jumping 3.7% in its best one-day performance since Jan. 4. The stock surged 5.5% that day.
Monday's slight gain put the Dow just 2.1% from its record high set in July. The S&P 500 and Nasdaq were 1.6% and 3% below their respective all-time highs.
The major indexes all started the session trading higher on a Politico report from Friday that said China offered last week to increase purchases of U.S. agricultural products if the U.S. eased restrictions on telecom giant Huawei. China's offer could also be contingent on the U.S. delaying higher tariffs on about $250 billion worth of Chinese imports, the report said.
"It seems like the tone on trade has gotten better," said Art Hogan, chief market strategist at National Securities. "That's the biggest driver."
"As long as we don't have another tweetstorm around trade, I think the market can stay in the upper end of this range," he said.
Treasury Secretary Steven Mnuchin said Monday morning that China and the U.S. have a "conceptual agreement" on enforcement mechanisms around intellectual property theft, one of the more contentious negotiation points between the two countries.
Both countries have been engaged in a trade war since 2018. In that time, China and the U.S. have exchanged tariffs on billions of dollars worth of goods. The conflict has dampened expectations of global economic growth.
New data out of China showed that exports unexpectedly fell in August with a large contraction for shipments to the U.S. The drop indicates further weakness in the world's second largest economy and puts further pressure on Chinese lawmakers to announce new economic stimulus.
"While trade talks are certainly a positive in hopes to secure a trade deal and the effort put forth by both parties to meet should go a long way towards helping alleviate some of the poor sentiment of late, many of the Technical reasons had been in place starting early last week," Mark Newton, managing member at Newton Advisors, said in a note. He highlighted improving breadth in the market and outperformance from tech shares, among other factors.
Alphabet shares briefly fell 1% on news that 50 attorneys general are joining an antitrust probe against Google. Alphabet later recovered to close 0.1% lower. Microsoft shares closed 1.1% lower. The S&P 500 tech sector fell 0.7%.
J.P. Morgan Chase climbed 2.5%. Citigroup advanced 4.3% while Bank of America gained 3.3%. The gains in bank stocks come as Treasury yields traded higher. The benchmark 10-year rate traded at 1.63% while the 2-year yield rose to 1.58%.
AT&T shares rose 1.5% after Elliott Management revealed a $3.2 billion stake in the telecom giant. In a letter to shareholders, Elliott said AT&T can "improve its business and realize a historic increase in value."
—CNBC's Silvia Amaro contributed to this report.