Stocks finished modestly higher in lackluster trading Monday, with the Dow and S&P 500 closing at new highs for the third-straight session, as investors digested a handful of mixed economic data and ahead this week's slew of earnings reports.
"The second half is underway, and things are already looking encouraging," according to Sam Stovall, chief equity strategist at S&P Capital IQ. "Catalysts for the market's advance, as well as our own optimism, are found in our interpretation of historical precedents, economic projections, fundamental forecasts and technical considerations. So when describing our outlook for the second-half performance of U.S. equities, we borrow liberally from Herman's Hermits: 'Second verse, same as the first.' While we expect the trend to be the same, we think the magnitude of advance will be less, but the volatility will be greater."
The Dow Jones Industrial Average eked out a gain of 19.96 points, to close at 15,484.26, led by Boeing. The Dow is within 60 points from its all-time high of 15,542.40 hit on May 22.
The S&P 500 rose 2.31 points to end at 1,682.50. The Nasdaq climbed 7.41 points to finish at 3,607.49. Both indexes posted their eighth-straight rally. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, closed below 14.
Among key S&P sectors, telecoms led the laggards, while utilities edged higher.
On the economic front, retail sales rose just 0.4 percent in June, according to the Commerce Department, missing expectations for a gain of 0.8 percent. It was still the third straight month of gains in sales and followed a revised 0.5 percent rise in May.
Meanwhile, growth in New York state's manufacturing sector accelerated to 9.46 in July from 7.84 in June, according to the New York Federal Reserve. Economists surveyed by Reuters expected a reading of 5. A reading above zero indicates expansion.
And U.S. business inventories ticked up 0.1 percent in May, according to the Commerce Department. Economists polled by Reuters had forecast inventories unchanged in May after a previously reported 0.3 percent gain.
China's annual economic growth slowed to 7.5 percent in the second quarter of 2013, from 7.7 percent, marking the slowest pace of year-over-year growth since the third quarter of last year. Still, markets cheered the news as many traders expected a figure below 7.5 percent following the recent slew of disappointing trade and manufacturing data from the world's second-largest economy.
(Read More: Chinese growth seems a bit too Goldilocks to some)
The Shanghai Composite rallied 1 percent on the news, but gains across Asia were capped by light trading volumes, with Japanese markets shut for a public holiday.
Later this week, Federal Reserve chairman Ben Bernanke is expected to be on Capitol Hill for his annual testimony on the economy. Markets got a boost last week after Benrnanke said said monetary policy would remain accommodative for the foreseeable future, even if the unemployment rate hit the Fed's target of 6.5 percent.
Stocks rallied sharply last week, with the Dow and S&P finishing at fresh highs. The S&P and Nasdaq posted their second best weekly gains this year.
Among earnings, Citigroup rose after the financial giant delivered another positive surprise in the banking sector, posting profit of $1.25 per share against estimates of $1.17. Banks were expected to be the best sector amid an otherwise lackluster quarter.
Analysts surveyed by Thomson Reuters expect S&P 500 companies' second-quarter earnings to have grown 2.8 percent from a year earlier, with revenue up 1.5 percent.
(Read More: Bob Doll: Only strong earnings can keep rally going)
Leap Wireless skyrocketed nearly 120 percent following news the provider agreed to be acquired by AT&T for $15 per share in cash, or about $1.2 billion. The deal represents an 88 percent premium to Friday's close.
Also, Boeing recovered after investigators determined the Friday fire on a 787 Dreamliner at Heathrow Airport was not caused by a battery issue. Meanwhile, Honeywell it was invited by UK investigators to participate in the probe of the Dreamliner fire. Separately, a source with knowledge of the investigation told Reuters that the emergency locator transmitter was being looked at for possible involvement in the fire. Honeywell makes the device for the 787.
Alexion Pharmaceuticals rose on a Reuters report that Switzerland's Roche is seeking financing for a possible Alexion bid.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
On Tap This Week:
TUESDAY: CPI, Treasury int'l capital, industrial production, NAHB housing market index, Fed's George speaks; Earnings from Coca-Cola, Goldman Sachs, Johnson & Johnson, Charles Schwab, Yahoo, CSX
WEDNESDAY: MBA mortgage applications, housing starts, Ben Bernanke speaks, oil inventories, Beige book; Earnings from Bank of America, Novartis, Abbott Labs, Bank of NY Mellon, Mattel, American Express, Ebay, IBM, Intel, Sandisk
THURSDAY: Jobless claims, Ben Bernanke speaks, Philadelphia Fed survey, leading indicators, natural gas inventories, Fed balance sheet/money supply, Dell special shareholder mtg; Earnings from BlackRock, Morgan Stanley, United Health, Verizon, Nokia, Google, Microsoft, AMD, Capital One, Chipotle
FRIDAY: G20 in Russia; Earnings from GE, Schlumberger, Vodafond, Honeywell