Wall Street stocks rallied on Monday, extending a rebound as fresh hopes for a US interest-rate cut boosted sentiment after last week's roller-coaster ride fuelled by worries of an AI tech bubble.

Tech giants enjoyed outsized gains, led by Google parent Alphabet after the company's latest artificial intelligence offering scored strong reviews.

Alphabet soared 6.3 percent, while the Nasdaq piled on 2.7 percent following gains by Apple, Tesla and other tech giants.

Monday's buoyant session "ties back to the whole idea that the AI trade still has life in it," said Briefing.com analyst Patrick O'Hare.

"The heart of the rebound we're seeing today" is because the market was "rethinking" its earlier scepticism on whether there would be another rate cut in December, he added.

US equities had also enjoyed a solid session on Friday following comments from New York Fed President John Williams that signalled the central bank could cut interest rates in December.

On Monday, Federal Reserve Governor Christopher Waller told Fox Business that he was advocating for a rate cut next month, pointing to a "still weak" labour market.

Wall Street indices have surged to multiple records in 2025 thanks in part to bullish sentiment about AI.

The strong performance has also been supported by easing Fed policy and lately by the market's judgement that US President Donald Trump's tariffs have not had as much of a negative impact as initially feared.

But recent weeks have nonetheless seen investors grow increasingly fearful that the vast sums pumped into tech may have been overdone and could take time to see profits realised, leading to warnings of a possible market correction.

That has been compounded by uncertainty over whether the Fed will cut rates for a third successive time next month, although the latest comments from central bankers boost those odds.

Focus is now on the release this week of the US producer price index, one of the last major data points before officials gather, with other key reports postponed or missed because of the recent government shutdown.

Trading volumes in New York are expected to be lighter than usual. The market will be closed for Thursday's Thanksgiving holiday, followed by a half session on Friday.

The S&P 500 gained 1.6 percent, to 6,705, while the Nasdaq jumped 2.7 percent, to 22,872. The Dow Jones Industrial Average rose 0.4 percent to 46,448. (AFP)