The S&P 500 and Nasdaq Composite closed at record highs on Monday, spurred by optimism about increased mergers and acquisitions activity after two major deals were announced.

The broad market S&P 500 gained 0.36% to end the day at 6,740.28, while the tech-heavy Nasdaq advanced 0.71% to finish at 22,941.67. The Dow Jones Industrial Average, however, fell 63.31 points, or 0.14%, to close at 46,694.97, weighed down by a decline in shares of Sherwin-Williams and Home Depot.

The Russell 2000 closed at a record high after crossing 2,500 for the first time. It settled up 0.4% at 2,486.36.

The S&P 500 and Nasdaq saw a boost from AMD jumping almost 24% after the company reached a deal with Sam Altman's AI leader that could ultimately end up giving the ChatGPT company a 10% stake in the chipmaker. AMD will use certain graphics processing units rolled out over multiple years. Nvidia, AMD's main competitor in graphics processors, came under pressure following that announcement.

Additionally, Comerica shares rallied nearly 14% after Fifth Third Bancorp reached a deal to buy the fellow regional bank for $10.9 billion in an all-stock transaction. The merger will form the ninth-largest U.S. bank by assets. The SPDR S&P Regional Banking ETF jumped 1% on expectations more deals were ahead in the space. Overall M&A has been picking up, adding to the animal spirits seen in the stock market this year.

"There is clearly an optimistic view of growth in the long term," said Brian Mulberry, senior client portfolio manager at Zacks Investment Management. "There is a more business (and bank) friendly regulatory environment and everyone expects rates to be much lower by this time next year, perhaps even as much as 1.25% lower, making the return on these deals much better and faster."

Investors have been looking past concerns about the current U.S. government shutdown, which has now dragged on into a second week after lawmakers once again failed to reach a deal on funding to keep the government open. The shutdown delayed the release of key economic data — including the September jobs report — which was originally due Friday.

"As of now, the stock market is shrugging off the government shutdown, and is more focused on earnings optimism and the prospect of additional Federal Reserve rate cuts," said Robert Edwards, chief investment officer at Edwards Asset Management.

"We would consider any notable market dip from the shutdown as an 'Investor Prime Day' shopping opportunity," he also said. "Even with the government shutdown and worries about the labor market, we believe the S&P 500 is on track to cross 7,000 by year-end."

Despite the data blackout, several Federal Reserve officials are slated to speak this week, including Fed Governor Stephen Miran on Wednesday and Chair Jerome Powell on Thursday.

The S&P 500 and Nasdaq Composite are coming off their fourth weekly advance in five weeks, rising 1.1% and 1.3%, respectively. The Dow rose for the third time in four weeks, advancing 1.1%.