Investors celebrated Tax Day with a broad-based rally and the S&P 500 closed at its highest level in nearly seven years, boosted by Citigroup's strong earnings report and a surge in mergers activity.
"They love them, they love them, they love them," said Tom Schrader, managing director of U.S. listed trading at Stifel Nicolaus. "I think it's a continuation from last week. The momentum is to the upside."
"We had some technical breakouts -- the retail sales number was a little stronger than expected, and the revision was better than expected, so the economy is doing OK," Schrader said. "Everything is rosy so maybe that means it's time to sell, but I would be surprised to see us end the week lower. Unless there are major warnings in the earnings, I would expect the markets to drift higher for the balance of the week."
The S&P 500 closed at 1468.47, the highest finish for the benchmark index since Sept. 15, 2000. The Nasdaq ended up 0.92% while the Dow Jones Industrial Average closed with triple digit gains but lagged the two other major indexes slightly. Still, the blue chip index was within striking distance of an all-time closing high of 12,786.64, recorded on Feb. 20.
A strong earnings report from Citigroup was the primary driver behind a 2.1% gain in the influential financial sector. The world's largest financial services company topped market expectations with its first-quarter earnings report, due in part to strength in its investment banking businesses. Citigroup reported quarterly earnings of $1.18 a share, above analysts' estimate of $1.09 a share.
"Expectations for this quarter are quite low and so far everything has beat which has given the market a boost," Barry Hyman, equity market strategist with EKN Financial Services, told CNBC.com. "We've recovered everything from that big drop in February and, for now, the market seems to be on this uninterrupted streak."
Stocks rose across the board on Monday, with all 10 S&P 500 sectors closing higher. Advancing shares outpaced declining shares by a three-to-one ratio on the New York Stock Exchange.
The major markets were also lifted by a spate of corporate takeovers. Shares of Sallie Mae surged 18% after the the nation's largest provider of student loans agreed to be acquired by an investor group for $25 billion, or $60 a share. The investment group, spearheaded by private equity firm JC Flowers, includes JP MorganChase and Bank of America .
"You've raised a lot of money on the private equity side so there is a lot of demand for equities and there's been a ton of buybacks," said Jason Trennert, chief investment strategist at Strategas Research Partners. "So the supply and demand situation really couldn't be much better for stocks."
Google shares closed up 1.6% after the Internet advertising giant said it will acquire online marketing firm DoubleClick for $3.1 billion in cash from two private equity firms.
Innkeepers USA Trust , a hotel real estate investment trust, agreed to be taken over by an affiliate of Apollo Investment for for $1.5 billion, or $17.75 a share.
Quest Diagnostics said it will buy diagnostic testing equipment firm AmeriPath for $1.23 billion in cash.
Eli Lilly rose more than 2% after the drugmaker reported first-quarter results that exceeded Wall Street forecasts, excluding charges. The company also boosted full-year guidance.
Wachovia, the fourth-largest U.S. bank, said first-quarter profit rose 33%, exceeding analysts' expectations. The company said commercial lending growth and the acquisition of Golden West Financial helped to offset thinner margins and higher credit losses.
Consumer spending remains healthy as monthly retail sales came in stronger-than-expected, rising 0.7%. It was the largest monthly rise in three months and topped analysts' estimated increase of 0.5%. In addition, February sales data was revised higher, adding further evidence that consumers are not tapped out despite housing woes and rising energy prices.
New York light crude futures traded wildly ahead of presidential elections in Nigeria, as some traders feared that potential violence could disrupt oil supplies as well as restarts at U.S. refineries. Oil fell for the straight session, down 2 cents to $63.61.
Treasury prices rallied, sending yields lower.
Stocks in Europe, Asia End Higher
The London FTSE-100, Paris CAC-40 and Frankfurt DAX all closed higher.
The battle for Dutch bank ABN AMRO is reaching a critical stage as Fortis, Royal Bank of Scotland and Santander have confirmed an interest in making a takeover bid. Meanwhile there are only 48 hours until the current bid from Barclays becomes definite.
Shares of Italian airline Alitalia rose ahead of the company's deadline Monday to submit offers to buy a 40% stake.
Tokyo's Nikkei 225 Average closed up 1.5%, lifted by a weaker yen which improves the earnings prospects of Japanese exporters and by gains in technology shares such as Canon.
South Korea's Kospi Index hit their ninth consecutive record close, as LG Petrochemical and S-Oil rose after each posted a surge in its quarterly earnings, raising confidence about the health of the chemical and energy sectors.
Hong Kong blue chips jumped sharply as China Mobile closed up while HSBC Holdings ended with eight straight gains.