The top performers during Monday's market rally by far were chip stocks after President Donald Trump and Chinese President Xi Jinping agreed to not add new tariffs on U.S. and Chinese goods and restart talks. Trump also said China will ease its ban on American companies selling products to Huawei.

The U.S. in May barred companies from selling to the giant Chinese telecommunications company, causing the shares to drop.

"We believe the truce sets up improving visibility, a rebound in orders and upside to depressed expectations for the Huawei-exposed semi suppliers in [the second half of 2019,]" Mizuho Securities analyst Vijay Rakesh wrote in a note to investors where the analyst upgraded shares of Western Digital.

The VanEck Vectors Semiconductor ETF, which includes the top S&P 500 chipmakers, rose 2.7% on Monday. Several technology hardware companies soared individually on the Huawei news, with Skyworks climbing 6%, Western Digital up 4.4%, Micron up nearly 4%, Qualcomm up almost 2%, Broadcom up 4.3% and AMD and Nvidia each rising over 1%.

Dow futures rallied more than 100 points.

Chipmakers make up the majority of top U.S. companies with revenue exposure to China, according to Goldman Sachs.

These companies have been under pressure since the Huawei ban went into place. Although Mizuho was positive about the recent news overall, Rakesh noted that "real clarity on supply chain re-locations and production sourcing is still limited." The analyst said semiconductor investors will have to wait for "a more permanent resolution to the trade tariffs and more confidence in the supply chain," which would drive the sector higher in 2020.

– CNBC's Yun Li and Michael Bloom contributed to this report.