Stocks finished near session highs Monday, with the S&P 500 setting a record close and the Nasdaq ending at its best level since November 2000, following a better-than-expected pending home sales report and after Italy's new prime minister named his cabinet over the weekend, ending two months of political deadlock in the nation.
(Read More: After-Hours Buzz: HLF, ESRX, RVBD & More)
The Dow Jones Industrial Average jumped 106.20 points to end at 14,818.75, led by Microsoft and Hewlett-Packard.
The S&P 500 climbed 11.37 points to end at 1,593.61, logging a fresh closing high and surpassing its previous record set on April 11. And the Nasdaq rallied 27.76 points to finish at 3,307.02, closing at its highest level since November 2000.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, closed near 14.
All key S&P sectors were higher, led by techs and materials.
While all three major averages are on pace to log gains for April, Sam Stovall, chief equity strategist of S&P Capital IQ noted that the S&P 500's performance in April is weaker than normal.
(Read More:Global Concerns? Beton Small Caps: Goldman Sachs)
"But who can blame investors for trying to catch their breath a bit since the S &P 500 has risen six months in a row and have been higher in 10 of its last 11," he wrote. "[And] even though all 10 sectors in the S&P 500 are up on the year, only 60 percent of them rose in April, led by the defensives–consumer staples, health care, telecoms and utilities."
Market confidence in Italy rose since a coalition government was established last week,after two months of political impasse. Italy's ten-year borrowing costs fell to the lowest point since October 2010 after the country's new prime minister named his cabinet over the weekend, ending two months of political deadlock in Italy.
Italy's new economy minister, Fabrizio Saccomanni, is expected to present his economic plan to parliament on Monday. Saccomanni said in an interview on Sunday that he plans to cut taxes and public spending and lower borrowing costs.
On the economic front, pending home sales gained 1.5 percent in March, according to the National Association of Realtors, in another positive sign for the housing market. Economists polled by Reuters had expected a gain of 1.0 percent after a previously reported 0.4 percent decline in February.
Meanwhile, consumer spending and income both increased 0.2 percent in March, according to the Commerce Department. Economists polled by Reuters expected personal spending growth to be flat last month, after rising 0.7 percent in February.
Last week, data showed that the economy expanded at a tepid 2.5 percent rate in the first quarter. Still, the market was largely unaffected as investors took the weak report as another sign that the Federal Reserve will continue to provide its easy money policy through asset purchases.
"Like lyrics from an early 1980s pop song, 'Ain't nothin' gonna break my stride, nobody's gonna slow me down,' investors appear unfazed by the weaker-than-expected growth in GDP and the eroding of 2013 S&P 500 EPS growth estimates," wrote Stovall.
(Read More: The Economy May Stink, but the Market Doesn't Care)
The government is scheduled to release its widely-watched monthly employment report at the end of the week, which is expected to show 150,000 new nonfarm payrolls in April, according to an estimate from Thomson Reuters. Investors will also look ahead to the Fed, which will begin a two-day policy setting meeting on Tuesday, with a statement to be released on Wednesday afternoon.
Among earnings, this week will be the last heavy one for first quarter results, with more than 130 of the S&P 500 companies slated to report.
(Read More: Earnings Preview: Media in Spotlight)
Disney rose after UBS raised its rating on the conglomerate to "buy" from "neutral."
Moody's surged nearly 10 percent to lead the S&P 500 gainers after the ratings agency and Standard & Poor's parent company McGraw-Hill settled two long-running lawsuits over debt vehicle ratings late last Friday. In addition, Lazard raised its price target on Moody's to $66 from $60.
Hospital companies were sharply higher as the government's proposed inpatient hospital payment rates looked better than expected for the upcoming year, according to analysts. Tenet Healthcare jumped after getting upgraded at RW Baird and UBS. UBS also upgraded LifePoint Hospitals and raised its price target on Community Health and Universal Health.
Meanwhile, Health Net rallied after the managed care company reported better-than-expected first quarter results and lifted its 2013 profit outlook.
(Read More:High-Frequency Traders Face Speed Limits)
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)