Slowing economic expansion in recent months, stemming partly from a stronger dollar and sluggish wage growth, has led many investors to push back expectations about when the Fed will begin raising interest rates for the first time since 2006.
“It’s becoming more of the collective thought that the Fed can wait, because you really don’t see any blistering growth,” said Kurt Brunner, a portfolio manager at Swarthmore Group in Philadelphia.
Apple (AAPL) shares rose 1.1 percent to $130.19 after Carl Icahn, one of the iPhone maker’s top 10 shareholders, said the stock was “still dramatically undervalued” and that it should be trading at $240.
The Nasdaq composite (^IXIC) added 30.15 points, or 0.6 percent, to end at 5,078.44.
Apple’s rise was the biggest factor for the rise in the three major indexes.
Seven of the 10 major S&P 500 sectors were higher, with the financial index’s 0.56 percent gain leading the way.
Sentiment got a boost from talk of mergers and acquisitions.
Altera (ALTR) rose 5.65 percent to $46.93 after the New York Post reported the company had resumed talks with Intel on a possible deal. Intel (INTC) rose 1.24 percent.
Endo International (ENDP) fell 5.37 percent to $80.77 after the generic drugmaker said it would buy privately held Par Pharmaceutical from TPG Capital in a $8.05 billion deal.
Alibaba (BABA) fell 1.53 percent after a group of luxury goods makers sued the company Friday, contending that the Chinese e-commerce giant knowingly made it possible for counterfeiters to sell their products throughout the world.
With Monday’s advances, the Dow is up 2.7 percent year to date, the S&P 500 is 3.4 percent higher and the Nasdaq is 7.2 percent stronger.
The S&P now trades at 17 times expected earnings, expensive compared to its 10-year median of 15.
Relatively light trading volume suggests recent gains may not be resilient, especially as the market approaches summer months when many on Wall Street takes time off, said Brunner.
About 5.3 billion shares changed hands on U.S. exchanges, below the 6.4 billion average this month, according to BATS Global Markets.
During the session, advancing issues outnumbered declining ones on the NYSE by 1,577 to 1,428, for a 1.10-to-1 ratio on the upside; on the Nasdaq, 1,719 issues rose and 1,014 fell for a 1.70-to-1 ratio favoring advancers.
The S&P 500 posted 34 new 52-week highs and 2 new lows; the Nasdaq composite recorded 111 new highs and 39 new lows.
–With additional reporting by Tanya Agrawal and Sweta Singh.
What to watch Tuesday:
- The Commerce Department releases housing starts for April at 8:30 a.m. Eastern time.
These selected companies are scheduled to release quarterly financial results:
- Cheetah Mobile (CMCM)
- Dick’s Sporting Goods (DKS)
- Etsy (ETSY)
- Home Depot (HD)
- TJX Cos. (TJX)
- Vodafone Group (VOD)
- Walmart Stores (WMT)