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NEW YORK (Reuters) - U.S. stocks advanced on Monday heading into the start of earnings season, building on gains sparked by last week's robust employment report and pushing the S&P 500 closer to its all-time high set in May.
Dell Inc DELL.O shot up 3.1 percent to $13.44 after the largest U.S. shareholder advisory firm recommended that shareholders vote for Chief Executive Michael Dell's $24.4 billion buyout offer.
Investors have been largely focused in recent months on when and to what degree the Federal Reserve will slow its $85 billion-a-month bond purchase program, which has been a major driver of the stock market's rally this year.
Markets were rattled by Fed Chairman Ben Bernanke's comments last month that the economy is expanding briskly enough for the central bank to pull back on the pace of purchases later this year.
Still, investors were encouraged by last Friday's better-than-expected jobs report as it suggested the economy was on good footing, even as the figures were seen as increasing the likelihood that the Fed's stimulus will be cut in the near-term.
Firms that deal directly with the Fed now see the stimulus reduction starting in September, a Reuters poll showed.
The improved view of the economy, combined with investors turning their attention to earnings season, helped send equities higher, said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
"There's really not a reason to sell stocks today," Hellwig said. "There's a high level of comfort with the earnings season and with the strong job market."
The S&P 500 has climbed in four out of the past five sessions, putting the benchmark less than 2 percent below its May 21 all-time closing high of 1,669.16. In June, the benchmark index fell as much as 5.8 percent below that record.
The Dow Jones industrial average .DJI gained 88.85 points, or 0.59 percent, to end at 15,224.69. The Standard & Poor's 500 Index .SPX rose 8.57 points, or 0.53 percent, to 1,640.46. The Nasdaq Composite Index .IXIC added 5.45 points, or 0.16 percent, to close at 3,484.83.
Dow component Alcoa Inc (AA.N), the largest U.S. aluminum producer, reported results after the market's close, which is typically seen as the start of earnings season.
Alcoa reported a larger-than-expected quarterly profit, excluding one-time items such as restructuring costs and legal expenses. Its stock slipped 0.6 percent after hours, reversing earlier gains in extended trading. In the regular session, Alcoa rose 1.4 percent to close at $7.92.
Analysts expect S&P 500 companies' earnings to rise 2.9 percent in the second quarter from a year ago, though that is down from the 5.4 percent growth seen in the first quarter, according to Thomson Reuters data. Quarterly revenue is forecast to increase 1.5 percent from a year ago.
Goldman Sachs analyst David Kostin said in a note sent Sunday night to clients that rising earnings, coupled with stable margins, should lift the S&P 500 by 8 percent to Goldman's year-end target of 1,750. The index ended at 1,631.89 on Friday.
Eight of the 10 S&P 500 industry sector indexes rose, led by gains in energy, utilities and consumer staples. Consol Energy (CNX.N) was among the S&P 500's best performers, up 4 percent at $27.56.
But technology shares waned and the Nasdaq fared worse than the other two major indexes to end only slightly higher.
Intel Corp (INTC.O) weighed on the Nasdaq and was the S&P 500's worst performer, sliding 3.6 percent to $23.19, after analysts at Evercore Partners downgraded the company's stock. The drop took the stock down to its lowest level since late April.
Volume was roughly 6.08 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with a daily average of about 6.4 billion shares this year.
Advancers had the upper hand on the NYSE, beating decliners by a ratio of about 3 to 2. On the Nasdaq, about seven stocks rose for every five that fell.
Editing by Jan Paschal