Updated at 4:35 p.m. ET
Euphoria broke out Monday on Wall Street after promising news of a vaccine trial provided a major dose of hope for the global economy.
The powerful rally was sparked after Pfizer and its partner BioNTech said the experimental COVID-19 vaccine was more than 90% effective.
The Dow Jones Industrial Average soared to record highs soon after the open, though it gave up a chunk of gains to finish up 835 points, or nearly 3%.
The Dow had previously hit its record high in February before the pandemic sent stocks sharply lower in March.
The S&P 500 ended up 1.6% after also hitting a record high earlier.
The prospect of a vaccine holds the promise of unlocking major parts of the global economy that have been mostly shut down since March, including restaurants, hotels and movie theaters.
The pandemic has led to millions of layoffs and business closures around the world, bringing the global economy to a grinding halt. Recently, cases of the virus have surged again in Europe and the United States, forcing government officials to reimpose lockdowns.
"Even as rising case numbers have triggered modest news restrictions in the U.S. and Europe, the base case remains that vaccines and improved treatment will bring the pandemic under control enough to allow economic activity to recover during the first half of next year," said Christopher Smart, chief global strategist at Barings Investment Institute.
Airlines and travel-related companies, which have been slammed by the pandemic, rose sharply. United Airlines was up by 19%, while Delta Air Lines was up 17%. Carnival was up 51%.
Other sectors that would directly benefit from improving business activity, such as banks, also gained. Wells Fargo was up 11%.
However, tech shares that soared when the pandemic left people at home binging on videos or shopping online sharply reversed course Monday. Netflix lost 8.6%, while Amazon was down 5%. Zoom, which millions of at-home office workers have used, slumped 17%.
Markets were already expected to open higher Monday after former Vice President Joe Biden was elected president over the weekend.
Stocks have been trading higher for days, with the S&P 500 surging 7.3% last week.
Biden's election, together with the likelihood that the Senate will remain in GOP control, could mean a new era of divided government, something the market has traditionally liked.
The final makeup of the Senate hinges on two Georgia runoffs scheduled for January.
Glenn Hubbard, a former top adviser to President George W Bush, said Biden's election increases the odds that Congress and the White House can agree on another relief bill, though it would make items on Democrats' wish list harder to achieve.
Democrats campaigned on issues such as higher taxes for the wealthy and corporations, which are unpopular with many Republicans.
"A divided government would still yield some additional fiscal measures, maybe not as much as an all-Democratic government," Hubbard said. "And might take off the table some significant tax increases."