S&P 500 closes at record, Dow adds 350 points as investors look for Santa rally

U.S. stock indexes rose Monday as markets reopened after the Christmas holiday and investors assessed the spread of the omicron Covid-19 variant.

The S&P 500 gained nearly 1.4% to close at 4,791.19, marking its 69th record close of the year. The index also hit an intraday record for the first time in more than a month. The Dow Jones Industrial Average added 351.82 points, or roughly 1%, at 36,302.38. The Nasdaq Composite ticked up about 1.4% to 15,871.26.

Market strategists remained positive on the overall equity outlook amid a surge in Covid cases. New studies suggest the omicron strain has a lower risk of hospitalization than other Covid variants.

"We do not expect Omicron to impact the growth outlook in any significant way, but rather it is likely to accelerate the end of the pandemic," JPMorgan's Dubravko Lakos-Bujas said in a note Monday.

Investors are looking for a Santa Claus rally to close out a year in which the S&P 500 has returned more than 27%.

The benchmark index historically gains during the Santa Claus rally — the final five trading days of the current year and the first two of the new year. The period began Monday.

Technology stocks boosted the S&P 500 on Monday. Chip names like AMD and Nvidia were among the average's top gainers, respectively adding 5.6% and 4.4%.

Energy stocks were also among the index's leaders as oil prices moved higher. APA Corp added about 7.3%, Devon Energy gained nearly 6.1%, and Diamondback Energy rose 4.9%. The sector is set to finish the year as the S&P 500's top-performing group.

Holiday sales rose 8.5% in 2021 from last year, the fastest pace in 17 years, according to Mastercard data. The results came despite a backdrop of supply chain disruptions, higher prices and the omicron variant in the last few weeks of shopping. Retail stocks like Ralph Lauren and Ross Stores gained.

Shares of GoDaddy jumped about 8.4% after reports that activist investor Starboard Value LP took a 6.5% stake in the domain registrar.

However, travel stocks were lower Monday as Covid disruptions hit those sectors.

Airline stocks fell after a holiday weekend that saw thousands of flights canceled due to Covid-related issues. The omicron variant led to a staffing shortage at a time when airlines were looking to ramp up their schedules to meet high travel demand. Delta Air Lines, United Airlines and American Airlines all closed lower.

Cruise line shares also retreated after Covid outbreaks on ships. Royal Caribbean slid 1.3%, Carnival fell nearly 1.2%, and Norwegian Cruise Line dipped 2.5%.

U.S. infectious disease expert Dr. Anthony Fauci said Sunday that cases of Covid-19 are likely going to keep surging as the omicron variant rapidly spreads across the globe. Fauci warned against getting complacent.

"Every day it goes up and up. The last weekly average was about 150,000 and it likely will go much higher," Fauci said on ABC's "This Week."

—CNBC's Jessica Bursztynsky and Maggie Fitzgerald contributed to this article.