U.S. stocks rallied on Monday, lifting the S&P 500 to a intraday record and briefly clearing its 2014 loss, as investors embraced activity on the M&A front and continued to disregard lackluster economic data as largely due to winter weather.
Mergers and acquisitions came into play, with RF Micro Devices agreeing to acquire TriQuint Semiconductor for about $1.6 billion, while Men's Wearhouse hiked its cash tender offer for Jos. A. Bank Clothiers.
"Maybe stocks are not overpriced at these levels if you have big players coming in and still doing deals," said Chris Gaffney, senior market strategist at EverBank.
"Bad weather is going to impact housing and retail sales; once it's spring and the weather is not so bad, we'll see a true reading on the economy," Gaffeny added.
Pfizer rose after the drugmaker said a study involving 85,000 people showed Prevenar 13, its blockbuster vaccine against childhood infections, prevented community-acquired pneumonia in people 65 and older; Humana shares rallied after the health insurer said the government's proposed cuts to Medicare appear to be less than previously thought, and Netflix agreed to pay Comcast for quicker speeds. Shares of eBay climbed after Carl Icahn accused the online auctioneer of lapses in corporate governance and reiterated his call for the spinoff of its payment business.
(Read more: Billionaire investor rips eBay board)
The Dow Jones Industrial Average climbed as much as 197 points, and ended at 16,207.14, up 103.84 points, or 0.6 percent.
The S&P 500 rose to a high of 1,858.76, clearing both the intraday and closing records set on Jan. 15. The index ended at 1,847.61, up 11.36 points, or 0.6 percent.
Rising to a 13-and-a-half-year high, the Nasdaq rose 29.56 points, or 0.7 percent, to 4,292.96.
For every two shares falling, more than three rose on the New York Stock Exchange, where 845 million shares traded. Composite volume neared 4 billion.
The dollar edged lower against the currencies of major U.S. trading partners, while the 10-year Treasury yield used to figure mortgage rates and other consumer loans fell a basis point to 2.746 percent.
Ahead of Wall Street's start, an initial gauge signaled growth in the services sector slowed in February, with stock futures retaining the bulk of their modest gains.
"I do think the economy is a lot stronger than the recent data has suggested," said Bruce Bittles, chief investment strategist at RW Baird & Co.
That said, "if the economy starts to get too heated up, then you have to think about higher wages going forward, which leads to inflation, and puts pressure on the Fed to finish the taper more quickly than they might have wanted, and brings the possibility they could raise rates sooner than 2015," Bittles added.
In testimony this month, Fed Chair Janet Yellen said the U.S. economy had picked up enough traction to handle reduced monetary stimulus, three rounds of which are viewed as helping propel equities higher. Yellen on Thursday delivers her weather-delayed testimony before the Senate.
Stocks fell on Friday, but the Nasdaq still managed a third weekly gain, as Wall Street considered earnings and another downbeat economic report.
—By CNBC's Kate Gibson
Coming Up This Week:
Earnings: Home Depot, Macy's, Toll Brothers, Boston Beer, First Solar, Chicago Bridge, Dreamworks Animation, Solar Capital, Sanderson Farms, Sempra Energy, American Tower, Bank of Montreal, Domino's Pizza, Expeditors International, Weatherford International
9:00 a.m.: S&P/Case-Shiller home prices
9:00 a.m.: FHFA home prices
10:00 a.m.: Consumer confidence
10:00 a.m.: Richmond Fed survey
1:00 p.m.: $32 billion 2-year note auction
Earnings: Target, J.C. Penney, TJX, AB InBev, Abercrombie and Fitch, AES, Barnes and Noble, Cablevision, Chesapeake Energy, Dollar Tree, Eaton Vance, Joy Global, Embraer, Caesar's Entertainment, Noodles and Co., Newfield Exploration, Royal Bank of Canada, Continental Resources, Vale, L Brands
10:00 a.m.: New home sales
11:30 p.m.: $12 billion 2-year floating-rate note auction
12:00 p.m.: Boston Fed President Eric Rosengren
1:00 p.m.: $35 billion 5-year note
7:30 p.m.: Cleveland Fed President Sandra Pianalto
Earnings: Gap, Best Buy, Kohl's, United Health Services, Chico's FAS, Monster Beverage, Decker's Outdoor, Luxottica Group, Mylan Labs, Ocwen, Wendy's, Rowan Cos, Leap Wireless, Fortress Investment, Mentor Graphics, KBR, Telefonica, Windstream, MBIA, Salesforce.com, Ross Stores, Sotheby's, Southwestern Energy, Sprouts Farmers Market
8:30 a.m.: Weekly jobless claims
8:30 a.m.: Durable goods
10:00 a.m.: Fed Chair Janet Yellen testifies before Senate Banking Committee
1:00 p.m.: $29 billion 7-year note auction
3:15 p.m.: Atlanta Fed President Dennis Lockhart
3:15 p.m.: Kansas City Fed President Esther George
Earnings: Liberty Media, Iron Mountain, 3-D Systems, NRG Energy, Seadrill
8:30 a.m.: Real GDP (Q4 advance)
9:45 a.m.: Chicago PMI
9:55 a.m.: Consumer sentiment
10:00 a.m.: Pending home sales
3:15 p.m.: Fed Gov. Jerome Stein and Minneapolis Fed President Narayana Kocherlakota on a panel
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