NEW YORK: U.S. stocks ended higher on Monday, with sharp gains for Tesla and Apple leading the way, as investors looked toward what the Federal Reserve would say about the interest rate outlook after its policy meeting this week.

Traders expected the Fed to keep rates unchanged while striking a hawkish tone.

Tesla shares surged 15.3%, after the electric vehicle maker made progress in securing regulatory approval to launch its advanced driver-assistance program in China, its second-largest market after the U.S.

Apple gained 2.5% following a report that the iPhone maker had renewed discussions with OpenAI about using the startup's generative artificial intelligence (AI) technology. Bernstein upgraded Apple's stock to "outperform".

Other megacap stocks finished lower including Alphabet , Meta Platforms, and Microsoft. Nvidia closed higher after paring early losses.

Nine out of 11 S&P 500 sectors ended higher led by stocks in consumer discretionary, utilities, real estates, materials and industrials. Equities in communication services and financials were the biggest losers.

"The bigger question than rates, because they're not going to cut this week, is how hawkish they're going to speak because they've already been pretty hawkish," said Thomas Hayes, chairman at hedge fund Great Hill Capital in New York.

Money markets are pricing in about 35 basis points (bps) of interest rate cuts this year, down from about 150 bps seen at the beginning of the year, according to LSEG.

The Dow Jones Industrial Average rose 146.43 points, or 0.38%, to 38,386.09, the S&P 500 gained 16.21 points, or 0.32%, to 5,116.17 and the Nasdaq Composite gained 55.18 points, or 0.35%, to 15,983.08.

Shares of Domino's Pizza jumped 5.6% after topping expectations for first-quarter same-store sales. Of the 233 companies in the S&P 500 that have reported quarterly earnings, 78.1% surpassed analyst expectations, compared with a long-term average of 67%, according to LSEG data.

Paramount Global gained 2.9% after a report that the Redstone family and Skydance Media CEO David Ellison have made concessions to make a potential change in control of the streaming firm more appealing for other investors.

"The overall momentum is still to the upside and it's an important week, with a ton of earnings, the Fed on Wednesday and nonfarm payrolls on Friday, and the path of least resistance is higher," said Bill Strazzullo, chief market strategist at Bell Curve Trading in Boston.

Meanwhile, the Japanese yen jumped against the dollar on Monday, with traders citing yen-buying intervention by authorities trying to support a currency languishing at levels last seen over three decades ago.

Advancing issues outnumbered decliners by a 2.72-to-1 ratio on the NYSE. On the Nasdaq, 2,615 stocks rose and 1,604 fell as advancing issues outnumbered decliners by a 1.63-to-1 ratio.

The S&P 500 posted 20 new 52-week highs and one new low while the Nasdaq recorded 80 new highs and 69 new lows.

Volume on U.S. exchanges was 9.98 billion shares, compared with the 11 billion average for the full session over the last 20 trading days. (Reporting by Chibuike Oguh in New York; additional reporting by Shristi Achar A and Johann M Cherian in Bengaluru; Editing by David Gregorio)