Stocks rebounded from Friday's huge losses, as oil dropped to near $136 and home builders benefitted from an unexpected surge in real estate sales in April.
Technology, though, prevented a wider recovery as the Nasdaq lagged from lower moves by some of its most prominent names.
The move upward in the Dow and S&P came despite a sharp fall in Lehman Brothers shares after the venerable investment bank said it will raise $6 billion in new capital. The company expects to report a $2.77 billion second-quarter loss.
The tech barometer Nasdaq was lower as Apple dropped more than 2 percent to kick off its annual developers' conference and Yahoo stumbled more than 1 percent following another volley from billionaire investor Carl Icahn, who sent a blistering letter criticizing the company's board.
Overall, stocks added to gains a half-hour into trading after the National Association of Realtors said pending home sales in April gained 6.3 percent. That came as a pleasant surprise considering that analysts were expecting the number to drop 1 percent.
Home builders gained across the board, led by Toll Brothers .
But oil once again seemed to be the dominant force in the market. The price briefly dropped below $136 a barrel after an unprecedented $11 surge Friday to more than $138 a barrel.
"Oil is still going to be weighing on the market. It's still be biggest factor," said Richard Sparks, senior analyst at Schaeffer's Investment Research. "At least off the March lows, the market was able to rally even in the face of higher oil prices. There was a little bit of a dichotomy there. But in hte recent couple of weeks we've seen (oil and stocks) move in opposite directions, like today."