Easing concerns over global credit problems and more signs of corporate dealmaking nudged major stock indexes to new highs for the year.
Stock indicators rose but posted uneven advances Monday following news that Abu Dhabi had extended $10 billion to Dubai to help the Middle Eastern city-state stay afloat. Markets had been worried in recent weeks that debt problems in the former boomtown could send ripples through global credit markets.
Investors were also encouraged by Exxon Mobil Corp.'s $31 billion purchase of XTO Energy, which sent energy stocks sharply higher. The deal will help Exxon tap into the growing supply of natural gas in the U.S. and could signal more consolidation in the energy industry.
In other news, banking giant Citigroup Inc. said it would pay back $20 billion in bailout money it received as part of the government's financial rescue program. The government will also sell its 34 percent stake in the company. The news came just days after Bank of America Corp. repaid the $45 billion in bailout money it owed U.S. taxpayers.
Despite the gain in stocks, investors were being cautious, refraining from making big bets in any one area of the market as they have for the past few weeks. Bond prices were little changed and commodities were just slightly higher.
A massive stock market rally that began in March has showed signs of slowing in the past month as investors take some money off the table and try to figure out how to position themselves in the new year. The Standard & Poor's 500 index is up just 1 percent so far this month, after a 5.7 percent gain in November and a 63.5 percent gain since early March.
"Most people, for the most part, have wrapped up the year," said Blaze Tankersley, chief market strategist at brokerage Bay Crest Partners.
The Dow Jones industrial average rose 29.55, or 0.3 percent, to 10,501.05, its highest close since Oct. 1, 2008.
The broader S&P 500 index rose 7.70, or 0.7 percent, to 1,114.11, its highest finish since Oct. 2, 2008. The Nasdaq composite index rose 21.79, or 1 percent, to 2,212.10.
The yield on the benchmark 10-year Treasury note was flat at 3.55 percent from late Friday.
The dollar fell against other currencies, helping to lift commodities prices. Commodities are priced in dollars and become cheaper for foreign buyers when the greenback falls.
Gold rose, while oil fell 36 cents to settle at $69.51 a barrel on the New York Mercantile Exchange.
Analysts said stocks are likely to drift over the next few days as investors await more details from the Federal Reserve, which wraps up its last policy meeting of the year on Wednesday.
Investors expect the central bank to keep its benchmark interest rate at a historic low level of near zero for the time being. But there is some concern that rates could rise sooner than previously thought as the economy improves.
While an end to low interest rates would be a sign the economy is on solid footing, it could also trip up stocks that have flourished this year in an environment of easy money.
"People simply want to know if we are going to keep this low interest-rate environment," said Michael Feser, president of Zecco Trading in Pasadena, California. "That has really been fuel for this market."
In other trading, the Russell 2000 index of smaller companies rose 9.42, or 1.6 percent, to 609.79.
Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.1 billion shares compared with 1 billion Friday.