U.S. stocks tallied slight gains on Monday, with benchmark indexes again closing at records, as investors pondered the strength of the economy and policy moves by the Federal Reserve.
"Investors are feeling a little more confident, and fundamentals are positive. There is still a lot of risk out there from unexpected bad news, but as long as we're not getting any," the market bias is upward, said Gary Thayer, chief macros strategist, Wells Fargo Advisors.
"We're still seeing some follow through from the good news we got last week from the European Central Bank, which made investors more comfortable with where multiples are, as we had a major central bank acting like they want to do more stimulus, which offset concerns some have had about Fed tapering," Thayer added.
The ECB on Thursday rolled out sub-zero interest rates and other anti-inflation measures in a move to boost the economy of the 18-nation euro zone. The U.S. Federal Reserve, however, has been reducing its monthly bond purchases otherwise known as quantitative easing, and expects to be finished altogether this fall.
Read MoreFed's Plosser: if economy improves as forecast, current taper pace may be too slow
Family Dollar Stores rallied after Carl Icahn late Friday reported a 9.39 percent stake in the discount retailer, making the hedge fund billionaire its biggest stakeholder. Shares of Netflix fell after Dow Jones reported shareholders had voted against splitting the online entertainment company's chairman and CEO roles.
Major U.S. Indexes
After a 45-point jump and 11-point dip, the Dow Jones Industrial Average rose 18.82 points, or 0.1 percent, to 16.943.10, an all-time closing high, with Walt Disney leading blue-chip gains that included 14 of 30 components.
The added 1.83 points, or 0.1 percent, to 1,951.27, with utilities the weakest and industrials faring best among its 10 major sectors.
Tyson Foods declined and Hillshire Brands jumped after meat producer Tyson said it brokered a "unilaterally binding offer" to acquire Hillshire, the maker of food products including Jimmy Dean sausages, for $8.55 billion, inlcuding debt. Merck & Co. agreed to acquire Idenix Pharmaceuticals in a deal valued at $3.85 billion, and Analog Devices said it would purchase Hittite Microwave for $78 a share.
The Nasdaq Composite climbed 14.84 points, or 0.3 percent, to 4,336.24.
Apple shares rose in the iPhone maker's first day of trading after a seven-for-one stock split. The Nikkei on Friday reported Apple was readying to sell its first wearable device in October, with a production target of 3 million to 5 million smartwatches a month in its first run.
The CBOE Volatility Index (VIX), a measure of investor uncertainty, rose 3.9 percent to 11.15, after Friday's drop to its lowest level since February 2007.
For every two shares falling, more than three rose on the New York Stock Exchange, where nearly 608 million shares traded. Composite volume breached 2.8 billion.
The dollar gained against the currencies of major U.S. trading partners and the 10-year Treasury yield used in determining mortgage rates and other consumer loans rose 2 basis points to 2.606 percent.
On the New York Mercantile Exchange, crude-oil futures for July delivery rose $1.75, or 1.7 percent, to $104.41 a barrel; gold futures for August delivery added $1.40, or 0.1 percent, to $1,253.90 an ounce.
"The economy is getting stronger and the slowdown from the first quarter has created some pent-up demand, some of it weather related," said Andrew Fitzpatrick, a financial advisor at the Fitzpatrick Group of Wells Fargo Advisors.
"The car sales from last week are another sign the economy is getting better; retail sales this week is something the market will key on," said Fitzpatrick of Thursday's report on retail sales in May, which he and other strategists view as key in offering further evidence of an economic rebound in the second quarter following an exceedingly disappointing start.
Read MoreRetail data could cement Wall Street's record climb
U.S. stocks closed at all-time highs on Friday for a third week of gains after the May jobs report showed slow but steady improvement in the labor market.
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—By CNBC's Kate Gibson
Coming Up This Week:
Tuesday: NFIB small business index, 7:30 a.m. Eastern; wholesale inventories, 10 a.m. Eastern.
Wednesday: 10-year Treasury note auction, 1 p.m. Eastern
Thursday: weekly jobless claims, 8:30 a.m. Eastern; retail sales, 8:30 a.m. Eastern; import and export prices, 8:30 a.m. Eastern; business inventories, 10 a.m. Eastern; 30-year Treasury bond auction, 1 p.m. Eastern.
Friday: producer price index, 8:30 a.m. Eastern; consumer sentiment, 9:45 a.m. Eastern.
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