But the market's momentum remained contained ahead of the Federal Reserve's meeting on interest rates later this week.
The market is getting "pushed forward" by merger news, falling oil prices and falling yields on long-term Treasury bonds, said Marc Pado, market strategist at Cantor Fitzgerald.
"But I do think that we're going to run out of steam here, potentially after the [Fed] meeting, and see the market finally settling in for a little consolidation," he told MarketWatch.
The Dow Jones Industrial Average rose 44 points to close at 13,308, marking its first close above 13,300. It was the 24th gain in 27 trading sessions for the Dow.
Prominent Dow components gaining ground included Boeing Co. , AIG and United Technologies Corp. .
The blue-chip average matched an 80-year record for the longest streak. The last time the Dow rose 24 out of 27 sessions was in 1927.
"The continued increase in stocks is flying in the face of a decidedly weakening economy," said Paul Nolte, director of investments at Hinsdale Associates, referring to Friday's news of a weak April employment report.
"The flipside to the economic numbers has been the huge amount of merger news," he said.
Leading the gains among blue chips Monday, Alcoa rose 8.3%. The aluminum giant has offered $73.25 a share, or $33 billion, in cash and stock for Canada's Alcan . The offer represents a 32% premium to Alcan's average closing price over the past 30 days.
Alcan's stock jumped 35.5%.
The S&P 500 index advanced 3.86 points to 1,509.48, while the Nasdaq Composite fell 1.2 points to 2,570.95.
Weighing on technology shares on the Nasdaq, Yahoo Inc. was the most heavily traded stock, losing 2%. A report late Friday said Microsoft Corp. was no longer holding talks about a possible merger with Yahoo.
Somewhat offsetting the decline, Dell Inc. rose 1% in heavy volume after the computer maker said it would support Microsoft's and Novel Inc.'s effort to integrate their respective operating systems -- Windows and Linux.
Overall trading volumes showed 1.1 billion shares exchanging hands on the New York Stock Exchange and 1.4 billion on the Nasdaq stock market. Advancing issues outpaced decliners by 17 to 14 on the NYSE, while decliners outpaced gainers by 16 to 13 on the Nasdaq.
By sector, gold , airlines and insurance led the gains.
Warren Buffett's Berkshire Hathaway said first-quarter earnings rose 12% on insurance gains. He warned over the weekend that global warming could increase hurricane losses at its catastrophe reinsurance unit.
Among falling sectors were Internet , broker/dealers and oil . The broad market received little support from falling oil prices, as the shares of oil companies also fell.
Crude oil slipped 46 cents to close at $61.47 a barrel, having lost 7.5% in a six-session losing streak, as the market reconsidered supply conditions.
The dollar was down against both the euro and the yen in early action, following the weak U.S. jobs report on Friday. The euro also received a slight boost after the as-expected victory of right-wing candidate Nicolas Sarkozy in the French presidential election.
Later in the week, the European Central Bank is expected to leave interest rates unchanged -- but also to signal a June rate rise.
Gold futures rose 70 cents to close at $690.40 an ounce.
Treasurys, meanwhile, finished flat following a lackluster auction of 3-year notes. The benchmark 10-year Treasury bond finished up 1/32 at 99 29/32, yielding 4.638%.
Elsewhere, BAE Systems is offering $88 a share, or $41 billion, for defense contractor Armor Holdings , which gained 5.4%.
Rio Tinto rose almost 7% after analysts said BHP Billiton could afford to buy the company. The gains extended a rise in the miner's shares after Merrill Lynch said that a private-equity consortium could afford to buy BHP Billiton .
Merger activity and share buybacks have remained key drivers of the market's advance as cash-rich companies put their money to use. A smaller pool of overall stock, together with speculation about more mergers, helps lift the broad market.
Still, investors are also now faced with the reality of a slowing economy, as shown in last week's below-par employment report for April. Attention will now be turning toward the Federal Reserve, which meets Wednesday to decide on interest rates.
While the Fed is widely expected to leave rates unchanged, investors hope it will acknowledge signs of a slowing economy, which could open the door for rate cuts later this year.
Elsewhere, Motorola ended unchanged. Billionaire dissident shareholder Carl Icahn is due to push for a seat on its board at a meeting in Chicago.
ABN Amro fell 2.1%. The Dutch bank turned down a $24.5 billion offer for its LaSalle operation from banks led by the Royal Bank of Scotland, saying too many conditions are attached. Instead it prefers a $21 billion offer from Bank of America .
News Corp., which is bidding $5 billion for Dow Jones, sold a stake in Australia's Fairfax Media for 380 million Australian dollars. Dow Jones is the owner of The Wall Street Journal and MarketWatch, the publisher of this report.
By Nick Godt