Shares of natural resources companies led the gains on expectations that an improving economy would drive up demand.
US front-month crude oil futures topped $86 a barrel and gave a big lift to energy shares, with Exxon Mobil Corp up almost 1 per cent and Chevron Corp up 1.3 per cent.
The S&P energy index gained 1.6 per cent, while the S&P materials index added 1.2 per cent.
The Dow Jones industrial average and the benchmark Standard & Poor’s 500 Index both finished at fresh 18-month closing highs. The Nasdaq ended at a 19-month closing high.
“The data is favorable. It kind of reaffirms what stock investors have been thinking all along,” said Steve Goldman, market strategist at Weeden & Co, a brokerage in Greenwich, Connecticut. “The economy is chugging along. First, it was inventory rebuilding. Now the consumer is gaining more confidence.”
Standouts included consumer discretionaries and technology shares. Apple shares rose 1.1 per cent to $238.49 -- a record closing high -- after initial sales of its hotly anticipated iPad portable computer surpassed some forecasts when it debuted on Saturday.
The Dow Jones industrial average gained 46.48 points, or 0.43 per cent, to end at 10,973.55. The Standard & Poor’s 500 Index rose 9.34 points, or 0.79 per cent, to finish at 1,187.44. The Nasdaq Composite Index shot up 26.95 points, or 1.12 per cent, to 2,429.53.
The S&P 500 is now up 75.5 per cent from its bottom in early March 2009.
Volume was extremely light, making Monday’s session the second-slowest volume day of 2010.
Traders said rising bond yields and resurgent crude oil prices might give the market some headwinds.
On the New York Mercantile Exchange, US crude rose $1.75, or 2.06 percent, to settle at $86.62 a barrel, the highest close since the October 2008, settlement of $88.95.
Exxon Mobil closed at $68.19, up 0.9 per cent, while Chevron ended at $77.66, up 1.3 per cent.
Aside from energy, semiconductor shares were another standout, with the semiconductor index up 3 per cent.
Cree jumped 10 per cent to $77.63 on Nasdaq after UBS raised its rating on the stock to “buy.” Global semiconductor sales rose 56 per cent in February from a year ago, according to an industry report.
The February home sales data lifted home builders' stocks, with the PHLX housing index up 1.8 per cent. The index was buoyed by shares of PulteGroup, up 2.9 per cent at $11.44, and Masco, up 2.2 per cent at $16.15.
Apple provided the top boost to the Nasdaq after saying it sold more than 300,000 iPads on the first day, and there were more than 1m downloads from its online store.
Shares of Harley-Davidson Inc roared to $31.65, their highest level in more than two years after an analyst raised his price target for the motorcycle maker’s stock. Harley’s stock shot up 10.5 per cent to close at $31.37.
The Institute for Supply Management said its services index jumped to 55.4 in March, its strongest reading since May 2006, and well above February’s reading of 53.0. The National Association of Realtors monthly index of pending sales of existing US homes shot up 8.2 per cent in February, when a flat reading was expected.
Non-farm payrolls gained 162,000 jobs in March, Friday’s report showed. That was below consensus, and many of the jobs were temporary, but more private-sector hiring was seen as further evidence the economy is on the mend.
Last week, the main US stock indexes closed their fifth straight week of gains and fourth straight positive quarter. The US stock market was closed on Friday for the Good Friday holiday.