The S&P, Dow return to record levels

The stock market returned to record levels on Monday as investors regained their appetite for riskier stocks.

At the close on Wall Street, the Standard & Poor's 500 index gained 18.2 points, or nearly 1 percent, to finish at record 1,896.7. The index last closed at a record high on April 2, when it reached 1,890.90.

The Dow Jones industrial average gained 112.13 points, or nearly 0.7 percent, to end at 16,695.47. The Dow's previous record high was 16,583.34 on Friday. The Nasdaq climbed 71.99 points, or 1.8 percent, to 4,143.86.

Some of the gain came from investors getting back into Internet and small companies after beating down those stocks for two months. Among the big gainers were Twitter and Facebook, which had plunged in March and April. The Russell 2000, an index made up of small companies, climbed the most in two months.

Investors have been more cautious this year than last. They've favored big, less volatile stocks that pay rich dividends because of concerns about the outlook for the economy. Utility and energy companies have been among the beneficiaries of this trend, and have outperformed the overall market in 2014.

While interest rates remain low, investors will likely keep getting drawn back into stocks after any sell-off because holding cash isn't generating any returns, said Tim Courtney, chief investment officer at Exencial, an independent wealth management company.

"There is some bargain buying in some of the names that got hit hard in March and April," said Courtney

Stocks also got a boost from some merger news. Pinnacle Foods surged $4.02, or 13.2 percent, to $34.47 after the company agreed to be acquired by Hillshire Brands. Pinnacle's brands include Duncan Hines and Aunt Jemima, while Hillshire makes Jimmy Dean and Sara Lee products. Hillshire fell $1.19, or 3.2 percent, to $35.76.

Even though stocks have largely moved sideways for most of the year following a surge in 2013, investors are still more concerned about missing the next leg of a rally than a market fall, said Doug Cote, chief market strategist, Voya Investment Management.