Housing stocks rose after data showed U.S. homebuilder sentiment rose in August to its highest since a matching reading almost a decade ago.
The data more than offset earlier concern over a surprise fall in manufacturing activity in New York state in August.
"The housing data was pretty good," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. "It certainly didn't hurt the bullish tone to everything housing-related."
An index of housing sector stocks <.HGX> gained 1.2 percent to hit its highest in 8-1/2 years.
Consumer stocks were among the day's gainers led by media companies including Disney (>> Walt Disney Co), which announced over the weekend plans for two theme park expansions that will bring the celebrated Star Wars movie franchise to life.
Disney shares gained 1.8 percent to $109.05 and Time Warner Inc (>> Time Warner Inc) and Charter Communications (>> Charter Communications, Inc.) also rose sharply. A reading of the sector's stocks <.DZM> rose 1.3 percent after closing on Friday with its largest two-week drop in almost four years on investor concern over the future of media consumption.
"The Star Wars news has lent a bid to Disney and that has spilled over into the rest of media space today," James said.
The Dow Jones industrial average <.DJI> rose 67.78 points, or 0.39 percent, to 17,545.18, the S&P 500 <.SPX> gained 10.9 points, or 0.52 percent, to 2,102.44 and the Nasdaq Composite <.IXIC> added 43.46 points, or 0.86 percent, to 5,091.70.
Among the best performing stocks on the S&P 500 and largest boost to the Nasdaq were those in biotech. The Nasdaq Biotech Index <.NBI> rose 2.1 percent after falling 4.8 percent over the previous two weeks.
With 92 percent of the S&P 500 companies having reported results so far, second-quarter earnings are expected to have edged up 1.2 percent, while revenue is expected to have fallen 3.5 percent, according to Thomson Reuters data.
Tesla (>> Tesla Motors Inc) rose 4.9 percent to $254.99 after Morgan Stanley raised its price target on the stock to $465 from $280 and said Tesla was its top pick among U.S. automakers.
Zulily (>> Zulily Inc) soared 49.1 percent to $18.74 after Liberty Interactive (>> Liberty Interactive Corp) said it would buy the online retailer for $2.4 billion. Liberty was down 1.5 percent at $29.80.
Estee Lauder (>> Estee Lauder Companies Inc) fell 6.8 percent to $82.80 after the cosmetics maker reported lower-than-expected quarterly sales.
The S&P 500 posted 29 new 52-week highs and 12 new lows; the Nasdaq Composite recorded 92 new highs and 83 new lows.
About 5.4 billion shares changed hands on U.S. exchanges, below the 6.84 billion daily average for the month to date, according to BATS Global Markets data.
(Reporting by Rodrigo Campos; Editing by Nick Zieminski)
By Rodrigo Campos
