By Ragini Mathur and Avinash P

The S&P 500 and the Nasdaq rose on Monday, extending the previous week's rally as chip stocks recovered while investors looked ahead to minutes from the central bank's last meeting and the start of second-quarter earnings season later in the week.

The Dow DJ:DJI briefly climbed to a new intraday record early in the session but later erased the gains.

Broadcom NASDAQ:AVGO rose 5.7% after the chipmaker and Apple NASDAQ:AAPL agreed to expand their partnership through 2031 to develop and supply a range of custom chips.

The information technology sector SP:S5INFT led gains on the benchmark S&P 500, while the Philadelphia SE Semiconductor index NASDAQ:SOX jumped 4.2%, after falling for two straight sessions.

South Korean chipmaker SK Hynix KRX:000660 is set to launch a U.S. listing on Monday to raise about $28 billion, according to regulatory filings.

In economic data, the Institute for Supply Management said its non-manufacturing purchasing managers index edged down to 54.0 last month, matching expectations.

At 10:18 a.m. ET, the Dow Jones Industrial Average DJ:DJI fell 149.02 points, or 0.28%, to 52,751.05, the S&P 500 CBOE:SPX gained 38.57 points, or 0.52%, to 7,521.81, and the Nasdaq Composite TVC:IXIC gained 283.78 points, or 1.10%, to 26,116.45.

The three indexes gained about 2% in the holiday-shortened week even as sentiment remained volatile for semiconductor stocks, among the market's biggest drivers this year.

However, investors took comfort from the recent strength in healthcare, industrials and financials, taking it as a sign that the rally may be broadening beyond the chip and AI trade.

As the second-quarter earnings season gathers pace later this month, it will be another key test for markets. Delta Air Lines NYSE:DAL and PepsiCo NASDAQ:PEP are expected to report results later in the week.

"This earnings season is important, given the fact that (the) 'Magnificent 7' have had a pretty tough time with things of late. And there's a feeling out there that just a little bit of good news could see them resume their rally," said David Morrison, senior market analyst at Trade Nation.

Microsoft shares fell 1.8% after the company said it is cutting about 2.1% of its workforce, or roughly 4,800 jobs.

Investors slightly eased their bets on an interest-rate hike from the U.S. Federal Reserve later this year after a cooler-than-expected jobs report last week.

Traders now see a 24% chance of a 25-basis-point rate hike at the central bank's July 29 meeting, down from about 30% a week earlier, according to CME's FedWatch tool.

Hawkish bets had risen after last month's Fed meeting, the first under new Chair Kevin Warsh. The minutes are due on Wednesday.

"Warsh wants the Fed to concentrate on the data and stick to that and not give any projections. So it could be that the minutes don't really give very much away," Morrison said.

Fed Governor Christopher Waller is scheduled to speak in Rome later in the session.

SpaceX NASDAQ:SPCX added 1.2%. Elon Musk's rocket and AI giant is set to join the tech-heavy Nasdaq 100 on Tuesday.

Shares of O'Reilly Automotive NASDAQ:ORLY declined 6.7%. Bloomberg News reported on Thursday that the auto parts retailer sent a cash offer to buy Genuine Parts NYSE:GPC, which fell 4.7%.

Advancing issues outnumbered decliners by a 1.25-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.

The S&P 500 and the Nasdaq Composite posted no new 52-week highs and no new lows.