The National Association of Realtors reported signed contracts to buy existing homes declined for a fifth straight month in October, illustrating a slowing in the housing market. The gauge of closed sales in November and December fell 0.6 percent from an upwardly revised September reading.
While the details are to be determined, the accord reached with Iran "bodes well, and is a net positive for equities, and today's action would support that" said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "Housing has lost some steam of late, which may be a function of higher mortgage rates," said Sandven, who adds that "we expect the housing recovery is still occurring."
DaVita Healthcare Partners rallied after the dialysis-services provider said Medicare reimbursement rates would not decline in 2014.
Alcoa jumped after Goldman Sachs upgraded shares of the aluminum producer to buy from neutral.
The interim agreement between Iran and the U.S. and five other nations would have Iran curtailing its nuclear activities in return for reduced international sanctions on car parts and commodities including oil and gold. The deal prompted shares of airlines to jump, along with those of auto-parts makers.
"The initial Iranian agreement with the world to surrender its nuclear ambitions - at least the naughty part - is bolstering stocks and goosing the dollar. Commodity prices are finding a clearer path during a difficult year when traditional correlations fell by the wayside," Andrew Wilkinson, chief economic strategist at Miller Tabak, wrote in emailed commentary. "But the path is down," he added.
Oil futures declined 88 cents, or 0.9 percent, to $93.96 a barrel on the New York Mercantile Exchange. Gold futures for February delivery lost $3.00, or 0.2 percent, to $1,241.60 an ounce.
The dollar rose against major U.S. trading partners, especially the Japanese yen, and Treasury prices gained, with the yield on the benchmark 10-year note down 1 basis point at 2.74 percent.
A strong finish on Wall Street last week also underpinned gains in Europe and Asia. The S&P 500 recorded its first close above 1,800 and theDow posted its longest weekly winning streak in nearly three years.
In days ahead, the focus will be on economic data ahead of Thursday's Thanksgiving holiday.
"We'll get a few further clues as to whether the Fed can afford to play Scrooge leading up to the festive season," said Deutsche Bank's Jim Reid in a morning research note, referring to the possible pace and timing of the Federal Reserve's eventual cutting back in its monthly asset purchases.