(Reuters) -The S&P 500 rose sharply to end at its highest in over two weeks on Monday, lifted by Nvidia and Tesla following signs that the Trump administration might take a more measured approach on tariffs against U.S. trading partners.

U.S. President Donald Trump had anticipated applying broad levies starting on April 2 but a set of sector-specific tariffs is now likely to be excluded, according to media reports over the weekend citing administration officials. 

A Trump administration official on Monday cautioned that the situation was fluid and no final decisions had been made.

Investors scooped up battered technology shares, with Nvidia and Advanced Micro Devices both rallying. Tesla surged, recovering some of its recent steep decline, helped by optimism about scaled back U.S. tariffs. 

Financial markets have been volatile in recent weeks due to fears of inflation and an economic downturn after Trump announced a series of tariffs last month on major U.S. trading partners, including China, Mexico and Canada.

The S&P 500 has recovered about 4% from its recent low on March 13, and it remains down around 6% from its February 19 record high close.

"Investors are experiencing a slight sigh of relief, but at the same time they are cynical about how long this may last," said Sam Stovall, chief investment strategist at CFRA Research. "The causes of this manufactured correction have not evaporated. They are tariffs and what the impact of tariffs could be on economic growth, inflation and corporate profits."

Several companies have cited tariff uncertainty as they lowered their forecasts for upcoming quarters. Data compiled by LSEG as of Friday showed earnings of companies in the S&P 500 are expected to grow by 10.5% in 2025, down by 3.5 percentage points since the beginning of the year.

According to preliminary data, the S&P 500 gained 99.18 points, or 1.75%, to end at 5,765.15 points, while the Nasdaq Composite gained 404.54 points, or 2.27%, to 18,188.59. The Dow Jones Industrial Average rose 585.86 points, or 1.40%, to 42,571.21.

A survey showed U.S. business activity picked up in March, while growing fears over import tariffs and deep government spending cuts continued to weigh on sentiment. Investors are awaiting data this week, including the Personal Consumption Expenditure (PCE) price index - the Federal Reserve's preferred inflation gauge - on Friday.

Dun & Bradstreet climbed after the data and analytics provider agreed to be acquired by private equity firm Clearlake Capital in a $7.7 billion deal.

Lockheed Martin fell  after BofA Global Research downgraded the weapons maker to "neutral" from "buy".

Crypto stocks rallied with a 4% rise in bitcoin prices, with MicroStrategy and Coinbase both advancing.

(Reporting by Sruthi Shankar and Johann M Cherian in Bengaluru and by; Noel Randewich in San Francisco; Editing by Maju Samuel and Aurora Ellis)