Gains in technology and industrial shares lifted U.S. stocks Monday, with news of more than $100 billion in arms deals with Saudi Arabia boosting defense contractors.
The Dow rose 89 points, or 0.4%, to 20894. The S&P 500 added 0.5% and the Nasdaq Composite gained 0.7%.
Technology stocks in the S&P 500 rallied 0.8% after posting their worst session of the year last week. Shares in Cisco Systems rose 1.9%.
Shares of aerospace and defense companies climbed, with Boeing and Lockheed Martin both adding 1.5%. Blackstone Group also surged 6.8% after Saudi Arabia agreed to commit $20 billion to the private-equity giant's new infrastructure fund.
Stocks had fallen last week amid concerns that uncertainty around the Trump administration could derail plans for tax cuts, regulation and infrastructure spending, but markets quickly pared losses, ending the week just a touch lower.
"Defense is a big part of the move today," said Chris Zaccarelli, chief investment officer of Cornerstone Financial Partners.
Signs of improvement in corporate earnings have also lifted shares in recent weeks. Of the 95% of S&P 500 companies that have reported results so far for the first quarter, 75% have beat earnings per share estimates, according to FactSet.
Shares of Ford Motor rose 1.6% following news Jim Hackett has been named Ford's new chief executive.
"It's quite encouraging how we bounced back from that wobble last week," said Ian Williams, strategist at brokerage Peel Hunt. "It underlines very strong bottom-up corporate earnings performance across all major developed markets...that's been a big factor offsetting geopolitical concerns," he said.
U.S. crude oil rose 0.8% to $51.05 a barrel, touching its highest level in a month ahead of Thursday's meeting of the Organization of the Petroleum Exporting Countries, where many expect an extension to ongoing production cuts. Saudi energy minister Khalid al-Falih said Sunday that oil producers are enthusiastic about extending crude output cuts by nine months.
"I think $40-60 [a barrel] is a reasonably good sweet spot markets are comfortable with," said Phil Orlando, chief equity strategist at Federated Investors. It is a level where frackers can make money, but not so high that it is overly inflationary or reduces consumption, he said.
Many investors will be watching for minutes from the Federal Reserve's May policy meeting, due Wednesday, as well as a raft of speeches from Fed officials this week for any hints at when it might start to reduce its $4.5 trillion balance sheet and how that could affect the course of interest rates. Investors currently see a 78.5% chance of a rate rise in June, according to fed-fund futures tracked by CME Group.
The WSJ Dollar Index edged down 0.1% following its worst week since July 2016. The yield on the benchmark 10-year U.S. Treasury note was steady at 2.246%, according to Tradeweb, from 2.243% on Friday. Yields rise as prices fall.
The Stoxx Europe 600 edged down less than 0.1%.
Japan's Nikkei Stock Average climbed 0.5%, led by steel, energy and machinery companies. Hong Kong's Hang Seng Index rose 0.9% to its highest close since 2015, while South Korea's Kospi gained 0.7%, ending at a new record. Stocks in Shanghai shed 0.5%.
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(END) Dow Jones Newswires
May 22, 2017 13:23 ET (17:23 GMT)