Market sentiment was also supported by signs of easing geopolitical tensions after Iran and Israel announced they had halted attacks against each other. The pause came following an appeal by U.S. President Donald Trump urging both sides to immediately "stop shooting."
The developments provided some relief to investors who had been closely monitoring the conflict. The exchanges over the previous 24 hours marked the most direct confrontation between Iran and Israel since a ceasefire was reached in April.
Despite the broader recovery, trading remained mixed. The Nasdaq led gains among the major indexes, while the Dow Jones Industrial Average finished slightly lower. Stocks also retreated from their session highs as trading progressed.
Technology stocks were the primary drivers of the market rebound. The S&P 500's technology sector advanced 1.5%, while the Philadelphia Semiconductor Index surged 5.6%, recovering part of the steep losses suffered on Friday. That earlier decline had erased approximately $1 trillion in market value from U.S.-listed chipmakers and raised concerns about the sustainability of the sector's rapid growth.
Among the standout performers was Intel, whose shares jumped 11.2% following a report by The Information that Alphabet's Google had placed an order for the production of more than three million tensor processing units scheduled for delivery in 2028.
According to market analysts, Monday's gains reflected investors taking advantage of discounted valuations following last week's market retreat.
"Today looks like a day where investors are doing a little bit of bargain hunting off the big tech selloff," said Rick Meckler, partner at Cherry Lane Investments, a family investment office based in New Vernon, New Jersey.
"What normally happens after that is you get analysts coming in and reiterating buys," he added.
Meckler also cautioned that markets remain vulnerable to volatility amid economic and geopolitical uncertainties.
"This market has been priced for quite a while for perfection, and these are certainly imperfect times," he said. "In that environment, you are going to see some back-and-forth, and some fear of prices having gone too far."
Friday's selloff came after Wall Street had repeatedly reached record highs in recent weeks. Investors were rattled by weaker-than-expected results from chipmaker Broadcom, which intensified concerns that enthusiasm surrounding artificial intelligence-related stocks may have become excessive. At the same time, stronger-than-expected U.S. jobs data prompted traders to reassess expectations for interest rates, increasing speculation that borrowing costs could rise later this year.
Broadcom shares recovered some ground on Monday, climbing 2.8%.
By the closing bell, the Dow Jones Industrial Average had fallen 80.77 points, or 0.16%, to 50,786.01. The S&P 500 gained 21.99 points, or 0.30%, ending at 7,405.73, while the Nasdaq Composite rose 220.23 points, or 0.86%, to close at 25,929.66.
Apple remained a major focus for investors after unveiling a series of artificial intelligence enhancements during its annual Worldwide Developers Conference in Cupertino, California. The company showcased upgrades to Siri as part of its broader AI strategy, but the announcement failed to excite investors. Apple shares closed 1.9% lower after slipping late in the trading session.
Analysts suggested the decline reflected a classic "sell-on-the-news" reaction.
"Perception has been for quite some time that Apple had been behind the curve as far as their AI offerings. That's why the stock widely underperformed many of the other big techs for some time until recently," said Bruce Zaro, managing director at Granite Wealth Management in Plymouth, Massachusetts.
Investors are also keeping a close eye on upcoming market events, including SpaceX's highly anticipated initial public offering. The offering is expected to serve as a significant test of investor appetite and could provide insight into whether enthusiasm for high-growth technology companies has become excessive.
Elsewhere in the technology sector, Marvell Technology climbed 9.6% after confirmation that the chipmaker would join the benchmark S&P 500 index before trading begins on June 22.
In the healthcare sector, Eli Lilly gained 1.6% after announcing encouraging trial results for its experimental obesity treatment, retatrutide. The study found that the drug not only promoted weight loss but also reduced the severity of sleep apnea and helped alleviate knee pain.
Market breadth painted a mixed picture. On the New York Stock Exchange, declining stocks narrowly outnumbered gainers by a ratio of 1.01 to 1. The exchange recorded 129 new highs and 162 new lows.
The Nasdaq showed stronger momentum, with 2,746 stocks advancing compared with 2,142 decliners, giving gainers a 1.28-to-1 advantage.
Meanwhile, the S&P 500 registered 13 new 52-week highs and seven new lows, while the Nasdaq Composite recorded 105 new highs and 164 new lows, highlighting the uneven nature of the market's recovery despite Monday's gains.