The Dow Jones Industrial Average rose 75.68 points, or 0.6 percent, to close at 12,760.36, marking three straight days of gains for the blue-chip average.
All key S&P 500 sectors were higher throughout most of the session, led by utilities and consumer discretionary.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.
"This is the kind of market where the lack of bad news is taken as good news," said Uri Landesman, President of Platinum Partners.
"The overall unemployment rate is still a problem, the housing market is a still a problem, and the Middle East is a huge problem, and the market keeps going up," Landesman said.
He expects stocks will continue to climb until the S&P 500 hits somewhere between 1,400 and 1,420, "then I think you'll see a major correction."
But others see stocks falling before they head higher. Market technicals show there could be a few weeks of weak price movement before stocks move higher again, Mark Arbeter, chief technical strategist at Standard & Poor's, said on CNBC.
“The short-term charts are suggesting that we may go down and retest the 1,329 level on the S&P—and possibly 1,323—before resuming the uptrend,” Arbeter said, adding the S&P 500 could reach 1,440.
In earnings news, Dean Foods soared after the dairy producer delivered better-than-expected earnings, helped by sales of its Horizon Organic milk. The firm also boosted its 2011 outlook.
Wendy's/Arbys Group also gained after the fast-food chain said it was making progress in its efforts to sell Arby's, and would raise prices to offset rising food costs.
Oil prices turned slightly higher on Monday despite news the CME Group raised margins for crude futures by 25 percent, as traders focused on supply constraints.
U.S. light, sweet crude rose 1.3 percent to close at $103.88 a barrel, while in London, Brent crude rose 1.5 percent to close at $117.63.
Precious metals also advanced as silver futures rose 3.7 percent to settle at $38.48 an ounce, while gold futures rose almost 1 percent to settle at $1,516.60.
The dollar, meanwhile, closed slightly lower against a basket of currencies, while the euro stabilized, although worries remain about Greece's debt troubles. Greece denied it was seeking a new bailout package from the EU. Also, an auction of short-term Greek debt went smoothly, which was encouraging to investors.
Elsewhere in corporate news, Google gained after the search-engine giant said it would launch a music service that would allow for flexible music storage, similar to a service recently created by Amazon.com.
Utilities were led higher by First Energy, which climbed after Citigroup raised its price target on the utility holding company to $41 from $36, and Wells Fargo boosted its rating to "outperform" from "market perform."
The Dow Jones Utility Index gained as more than 90 percent of all utility stocks rose.
Volume on the consolidated tape of the New York Stock Exchange was 3.3 billion shares, while 835 million changed hands on the NYSE floor.
Treasury prices shaved earlier losses after the government auctioned $32 billion in 3-year notes, which had a high yield of 1.000 percent and a bid-to-cover of 3.29.
On the economic front, wholesale businesses increased inventories by 1.1 percent in March amid a jump in sales after a 1 percent gain in February, according to the Commerce Department.
Also, an index of small business owner sentiment fell 0.7 point to 91.2 in April even as sales performance improved. The decline in the National Federation of Independent Business's small-business optimism index follows a 2.6-point drop in March.
China reported its trade surplus was $11.4 billion, nearly four times higher than expected, sparking fears that it could reignite criticism about its currency policy, but encouraging investors worried about a slowdown in China's growth.
Asian stocks rose, while European shares also closed higher, led by banks and mining stocks.