The stock market rallied on Monday, with the Nasdaq closing at a 14-year high, as increasing confidence among home builders and hopes for receding tensions in Russia emboldened investors in the equity market.
The Dow Jones industrial average rose 175.83 points, or 1.06 percent, to close at 16,838.74, according to preliminary figures. The Standard & Poor's 500-stock index gained 16.68 points, or 0.85 percent, to 1,971.74. The Nasdaq composite index climbed 43.39 points, or 0.97 percent, to 4,508.31.
This was the first time the Nasdaq closed above 4,500 since March 2000.
Homebuilders' stocks rose after the NAHB/Wells Fargo Housing Market index showed that home builder sentiment rose for the third straight month in August.
Interactive Feature | Standard & Poor's 500-Stock Index
The PHLX housing sector index climbed 1.7 percent, lifted by a rally in home builders, including PulteGroup, up 2.8 percent at $18.78, and D.R. Horton, up 1.4 percent at $21.13.
Ambiguity lingered in Russia, where tensions with Ukraine have recently rattled markets. Russian officials said on Monday that while all issues related to the country's humanitarian convoy to Ukraine had been resolved, progress had not been made on reaching a cease-fire.
"Today, geopolitical threats from the Israel-Palestine situation and from Ukraine and Russia have sort of taken a back seat, and buyers are showing up," said Adam Sarhan, chief executive of Sarhan Capital in New York.
Another factor supporting stocks is investors' expectations that the Federal Reserve's chairwoman, Janet L. Yellen, will signal later this week that the central bank remains committed to providing easy money for some time to come. She is scheduled to speak on Friday to central bankers from around the globe in Jackson Hole, Wyo., at an annual conference hosted by the Federal Reserve Bank of Kansas City.
"The Fed remains accommodative, the economy is continuing to improve, and earnings are more or less not disappointing, which is all good news," Mr. Sarhan said.
A flurry of merger and acquisitions activity gave stocks another boost.
The discount retailer Dollar General offered to buy Family Dollar Stores for $8.95 billion, trumping an offer by Dollar Tree. Family Dollar shares gained 4.9 percent to $79.81. Dollar General jumped 11.6 percent to $64.14, ranking as the S.&P. 500's best performer.
Procter & Gamble, a Dow component, rose 0.8 percent to $82.44 after people familiar with the matter said the company, the world's largest household products maker, was working with advisers including Goldman Sachs to review up to 100 underperforming brands for potential divestiture.
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