The S&P 500 set an intraday record high on Monday, bolstering the view that the decade-long bull market has further to run, after consumer spending rose in March and inflation data was benign.
The benchmark index topped its intraday record of 2,940.91 hit on Sept. 21, rising to a session high of 2,949.52. The S&P 500 is now up more than 17% for the year to date. The index along with the Nasdaq posted another record close as well on Monday.
Hopes of a resolution of the US-China trade war, upbeat earnings and a dovish Federal Reserve have powered the rally in stocks this year, and even though the Monday's gains were small, strategists said recent new highs encourage further buying.
"It does create pressure to bring more buyers. Today's headline augments the fear of missing out. It's going to make the bears less bearish or more worried they're going to get run over," said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.
A Commerce Department report showed US consumer spending increased by the most in more than 9-1/2 years in March, but a key inflation measure posted its smallest annual gain in 14 months.
Tame inflation supports the Fed's recent decision to suspend further interest rate increases this year.
As trade talks enter their last leg, US negotiators head to China on Tuesday to try to hammer out details to end the protracted tariff spat between the two countries.
US Treasury Secretary Steven Mnuchin, in a television interview that aired on Monday, said he hopes that the latest talks between the United States and China may seal a trade deal.
"It's really about the administration continuing to hint a trade agreement is near," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey. "People don't want to miss out on the expected rally from that news."
The Dow Jones Industrial Average rose 11.06 points, or 0.04%, to 26,554.39, the S&P 500 gained 3.15 points, or 0.11%, to 2,943.03 and the Nasdaq Composite added 15.46 points, or 0.19%, to 8,161.85.
The Fed starts a two-day meeting on Tuesday, at the end of which a decision on interest rates will be announced.
Another busy week of earnings is expected. After the bell, shares of Google parent Alphabet Inc were down 7.2% after it reported revenue below Wall Street targets.
Alphabet shares ended the regular session up 1.5% at $1,296.20.
Apple Inc is due to report on Tuesday.
Analysts now expect earnings of S&P 500 companies to have fallen just 0.2% in the first quarter, a sharp improvement from a 2% fall estimated at the beginning of the month, according to IBES data from Refinitiv data.
Ingersoll-Rand shares jumped 6.5 percent after the Wall Street Journal reported Gardner Denver Holdings Inc is nearing a deal to acquire a unit of the air conditioner maker.
Advancing issues outnumbered declining ones on the NYSE by a 1.57-to-1 ratio; on Nasdaq, a 1.54-to-1 ratio favoured advancers.
The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 79 new highs and 25 new lows.
Volume on US exchanges was 5.81 billion shares, compared to the 6.56 billion average over the last 20 trading days.
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