The S&P 500 hit a record high on Monday, while the Nasdaq fell just short of its lifetime high touched in late July as a more civil tone between the United States and China lifted hopes for a possible trade deal and investors looked toward a Federal Reserve rate cut later this week.

Microsoft Corp shares climbed 2.46 percent, making the stock among the biggest boosts to each of three major indexes after the technology giant won the Pentagon's 10 billion U.S. dollars cloud computing contract, beating out Amazon.com Inc.

After rising as much as 0.71 percent to 3,044.08, the benchmark S&P closed up 0.56 percent at 3,039.34, topping the record high of 3,025.86 hit on July 26, while the Nasdaq ended the session less than five points below its closing high. The Dow Jones Industrial Average ended less than one percent away from its record closing level.

President Donald Trump said Monday he expected to sign a significant part of a trade deal with China ahead of schedule but did not elaborate on the timing, building on optimism from Friday when Washington said it was "close to finalizing" some parts of a trade deal.

"After we finish earnings season and get through this Fed meeting, people will be looking to the trade deal," said Walter Todd, chief investment officer at Greenwood Capital in Greenwood, South Carolina. "Importantly, as you watch the economic numbers come in here and globally between now and year end, you want to continue to see incremental positive sequential changes. You want to get some confirmation that in fact growth has bottomed and has started to improve."

The Dow Jones Industrial Average rose 132.25 points, or 0.49 percent, to 27,090.31, the S&P 500 gained 16.79 points, or 0.56%, to 3,039.34 and the Nasdaq Composite  added 82.87 points, or 1.01 percent, to 8,325.99.

The third-quarter earnings season has managed to ease some concerns related to the impact of trade tensions on corporate profits, with over 78 percent of the 204 S&P 500 companies that have reported so far surpassing profit expectations, according to Refinitiv data. Still, third-quarter earnings are expected to show a decline of 2 percent.

The S&P 500 posted 39 new 52-week highs and no new lows; the Nasdaq Composite recorded 115 new highs and 52 new lows.

U.S.-listed Chinese firms trade mostly higher

U.S.-listed Chinese companies traded mostly higher on Monday with eight of the top 10 stocks by weight in the S&P U.S. Listed China 50 index ending the day on an upbeat note.

Shares of Pinduoduo and Alibaba Group Holding rose 4.26 percent and 2.51 percent, respectively, leading the gainers in the top 10 stocks of the index.

Shares of TAL Education Group and Yum China Holdings slid 2.90 percent and 0.14 percent, respectively, the only two decliners in the top 10 stocks of the index.

(With input from Reuters and Xinhua)