Stocks closed higher Monday, with the upside fueled by massive gains from several Magnificent 7 stocks. Wall Street is also looking forward to this week's Federal Reserve meeting, hopeful for clues on the central bank's rate-cut plans.  

At the close, the Dow Jones Industrial Average was up 0.2% at 38,790, the S&P 500 was 0.6% higher at 5,149, and the Nasdaq Composite had gained 0.8% to 16,103.

A 4.6% rally in Alphabet's (GOOGL) share price helped spark the outsized returns for the S&P 500 and Nasdaq. The communication services stock jumped after a Bloomberg report indicated Apple (AAPL) is considering licensing Google's ( GOOG ) Gemini generative artificial intelligence (AI) models for the iPhone. Apple stock rose 0.6% on the news.

CFRA Research analyst Angelo Zino kept his Buy ratings on both Alphabet and Apple following the news. The headlines likely confirm "that AAPL's internal [AI] efforts are well behind those of OpenAI and Gemini," Zino says, adding that they also show "the company is serious about adding significant AI capabilities" to its new iPhones.

Additionally, Zino believes that Alphabet's Google ( GOOG ) "is best positioned to win any external deal for AI on AAPL's devices given the strong search partnership the two already have."

Tesla soars after raising Model Y prices in Europe

It was a solid day for each of the Magnificent 7 stocks. While Alphabet's rally was indeed notable, Tesla (TSLA) was the best performer of the bunch. Specifically, TSLA stock rose 6.3% after the company said it raised the price of several of its Model Y electric vehicles in Europe. 

Last week, Wells Fargo ( WFC ) analyst Colin Langan downgraded the mega-cap stock to Sell from Hold, saying he expects recent price cuts to its electric vehicles to have "a diminishing impact on demand."

March Fed meeting starts tomorrow

Meanwhile, investors are keeping a close watch for any Fed-related headlines, with the central bank set to kick off its two-day policy meeting tomorrow. 

No change to the federal funds rate is expected to be announced when the gathering concludes Wednesday afternoon, but the Fed's "dot plot," which summarizes what each member expects monetary policy to be going forward, could signal where the central bank expects it to be at the end of the year.

"Hotter-than-expected inflation data to start the year argue for a hawkish-leaning message from the Fed at the March FOMC meeting," says a team of economists at Deutsche Bank ( DB ). "That said, in a very close call, we do not yet expect this to manifest in the Fed signaling less easing this year." 

While the economists do anticipate a mild upward revision to the Fed's inflation forecasts for this year, "we expect the median dot to stay at three cuts for 2024."

According to CME Group's ( CME ) FedWatch Tool, futures traders are currently pricing a 34% chance the Fed will cut interest rates by a full percentage point this year, with the first quarter-point rate cut expected in June.