Shares of economic bellwether FedEx Corp climbed 4.4 percent to $82.45 after the package delivery and business services company boosted its quarterly and full-year earnings forecast, a sign that demand may be picking up again.
The gains in FedEx pushed the Dow Jones Transportation Average <.DJT> up 1.9 percent.
Really, it's the earnings data and more so with FedEx that they are guiding upward -- right now that's what people are looking at, said Doug Roberts, chief investment strategist at Channel Capital Research.com in Shrewsbury, New Jersey.
A surprising 23.6 percent jump in new home sales in June from May countered some disappointing data in recent weeks that heightened concerns the economy may slip back into recession.
The Dow Jones U.S. Home Construction <.DJUSHB> index gained 2.1 percent. The home builders' index was led by PulteGroup Inc , up 3.8 percent at $8.99.
The Dow Jones industrial average <.DJI> gained 52.26 points, or 0.50 percent, to 10,476.88. The Standard & Poor's 500 Index <.SPX> added 6.48 points, or 0.59 percent, to 1,109.14. The Nasdaq Composite Index <.IXIC> rose 13.55 points, or 0.60 percent, to 2,283.02.
The S&P 500 stayed above the 1,100 level after closing just above that level on Friday, which some investors feel is of key importance as it would pierce the top of the trading range the benchmark index had failed to break several times in the past month.
At mid-afternoon, both the Dow and the Nasdaq were slightly higher for the year to date, while the S&P 500 was within striking distance of break-even, as the indexes have clawed back from declines since late April closing highs.
But even if it drifts above, are we going to get above previous ranges significantly? Is it going to convince breaking upward to give people some confidence? Roberts asked.
The S&P 500 rose 7.8 percent during the three weeks ended Friday, the largest gain in such a period since the first week of August 2009.
Genzyme Corp continued to rise on takeover speculation as the top boost to the Nasdaq 100, as the Wall Street Journal said Britain's GlaxoSmithKline Plc had recently made a very casual approach, to the U.S. biotech company.
Genzyme surged 7.6 percent to $67.28.
Sources familiar with the matter said on Friday that Sanofi-Aventis was sounding out Genzyme, prompting a 15 percent jump in the U.S. biotech company's market value to $16.7 billion.
BP Plc is expected to install an American known for diplomacy as chief executive, replacing Tony Hayward who has come under fire for his gaffe-prone handling of the worst oil spill in U.S. history. Bob Dudley, the U.S. executive managing the response operation to the spill in the Gulf of Mexico, is poised to get the top job in the next 24 hours, a move that could soften U.S. criticism of the major British oil company, sources close to BP say. U.S.-listed shares of BP gained 4.4 percent to $38.47.
(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)