A Chinese state-backed tabloid said Beijing and Washington were "moving closer to agreeing" to an initial pact, which lifted trade-sensitive semiconductor stocks, including Applied Materials Inc, up 4.18%, and Lam Research Corp, which gained 2.68%. The Philadelphia Semiconductor index jumped 2.43% and was on pace for its best day in just over three weeks.
Nvidia Corp rose 4.89% and paced the gains on the chip index as Morgan Stanley upgraded its shares to "overweight" from "equal weight".
The newspaper report came on the heels of comments over the weekend by a top U.S. official that an agreement was still possible by the end of the year, dampening worries the negotiations could spill over into 2020.
"Trade is the fulcrum of investor emotions," said Sam Stovall, chief investment strategist at CFRA Research in New York.
"If they are feeling good that we will get some sort of an agreement then the market is up 100 points, if they are feeling the other way then the market is down 100 points."
The Dow Jones Industrial Average rose 189.77 points, or 0.68%, to 28,065.39, the S&P 500 gained 23.29 points, or 0.75%, to 3,133.58 and the Nasdaq Composite added 112.60 points, or 1.32%, to 8,632.49.
Apple Inc rose 1.75% as the top boost to the S&P and Nasdaq and the second-biggest lift to the price-weighted Dow Jones Industrial Average.
Gains on Monday were broad with only the defensive consumer staples and utilities S&P sectors in the red. Tech gains helped push the Nasdaq up by more than 1 percent, with the group on pace for its best day since Nov. 1.
Tiffany & Co jumped 6.20% and was the biggest gainer on the S&P 500 as the luxury jeweler agreed to a sweetened $16.2 billion deal to be acquired by France's LVMH.
U.S. discount brokerage TD Ameritrade Holding Corp was up 7.58% after larger rival Charles Schwab Corp said it would buy the company in an all-stock deal valued at about $26 billion. Schwab rose 2.30%.
EBay Inc gained 2.08% after the e-commerce major said it would sell ticketing unit StubHub to ticket reseller Viagogo for $4.05 billion in cash.
After the market closed, shares of Palo Alto Networks Inc tumbled after the cybersecurity firm's quarterly results.
Major averages on Wall Street have reached a series of new highs recently on hopes for progress of a trade deal and as third-quarter corporate earnings came in better than lowered expectations. Monday marked the fourth closing record for the Dow, S&P 500 and Nasdaq in the past seven sessions.
Failing to participate in the advance, Uber Technologies slipped 1.52% as the ride-hailing company was stripped of its license to carry paying passengers in London for the second time in just over two years.
Advancing issues outnumbered declining ones on the NYSE by a 2.75-to-1 ratio; on Nasdaq, a 3.30-to-1 ratio favored advancers.
The S&P 500 posted 40 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 139 new highs and 61 new lows.
Volume on U.S. exchanges was 6.55 billion shares, compared to the 7.03 billion average for the full session over the last 20 trading days.
By Chuck Mikolajczak