The economic figures were "dynamite," and part of a trend of positive news that’s added to the markets’ momentum since the rally first began in March, said Alfred E. Goldman, chief market strategist with A.G. Edwards & Sons Inc. in St. Louis. But he warned there may be some pullback ahead.

"It’s positive for the long term, but short term we’ve come an awful long way in a short period time," Goldman said. "I think the odds favor some sort of pause to refresh."

The Nasdaq composite index was up 35.49, or 1.8 percent, at 1,967.70, after last week’s 3.6 percent advance. The tech-dominated index had its best close since Jan. 17, 2002, when it stood at 1,985.82.

The Dow Jones industrial average closed up 57.34, or 0.6 percent, at 9,858.46, having gained 2.3 percent last week. The Dow reached its highest closing level since May 31, 2002, when it stood at 9,925.25.

And the Standard & Poor’s 500 index closed up 8.31, or 0.8 percent, at 1,059.02, having risen 2.1 percent. The S&P last closed higher on May 31, 2002, when it reached 1,067.14.

Wall Street was pleased with news that the manufacturing sector grew in October for the fourth straight month. The Institute of Supply Management said its manufacturing index rose to 57 last month from 53.7 in September, a stronger showing than the 55.5 analysts expected.

An index reading above 50 indicates expansion; one below 50 indicates that manufacturing activity is contracting. From March through June, the manufacturing index was below 50.

Also today, a government report showed that construction spending reached an all-time monthly high in September, underscoring the housing market’s role in the economic recovery. The Commerce Department reported a 1.3 percent jump in the total value of all building projects. Analysts projected a more modest advance of about 0.4 percent.

Good economic data, merger news and generally strong financial results helped the markets climb last month. But with the earnings season winding down, investors may have little incentive to send stocks higher.

Despite mounting evidence that the economy is recovering, a number of investors remain hesitant to jump into the market. Their savings accounts hold great potential, said Ned Riley, chief investment strategist at State Street Global Advisors.