The S&P 500 and the Nasdaq advanced for a fourth consecutive session on Monday, as investors geared up for a slew of mega-cap earnings and a Federal Reserve update on interest rate policy later this week.

Both indexes hit their highest levels in more than a week and registered their longest string of advances since December.

Gains in a handful of mega-cap names did most of the heavy lifting for the S&P 500, with Apple, Microsoft, Alphabet, Meta and Broadcom offering the benchmark's top boosts.

Apple, Meta, Microsoft and Tesla are slated to report quarterly results later this week, setting up a key test for a rally powered by euphoria around AI.

Investors will look for signs of measurable pay-offs from AI spending. With concerns over high valuations in the tech space, guidance will be especially important and even a modest stumble could spark a rethink about the AI trade.

"You're seeing communications and technology are trading well today in advance of the earnings ⁠from a lot of the large companies," said Chris Zaccarelli, chief investment officer of Northlight Asset Management in Charlotte, North Carolina.

"It seems like we're having an expansion in corporate profits and an expansion in the economy, so generally speaking, investors are cautiously optimistic and most likely looking forward to earnings season."

Of the 64 companies in the S&P 500 that had reported earnings as of Friday, 79.7 percent beat analyst expectations as per data compiled by LSEG.

The S&P 500 rose 0.5 percent to 6,950, the Dow rose 0.6 percent to 49,412, while the Nasdaq rose 0.4 percent to 23,601. (Reuters)