Stocks advanced on Monday after a rosy outlook from FedEx and strong home sales data fueled optimism, helping the S&P 500 stay above a key resistance level that could confirm Wall Street may be back in bullish mode.

Shares of economic bellwether FedEx Corp rose 4.9 percent to $82.86 after the package delivery and business services company raised its quarterly and full-year earnings forecast, a sign that demand may be picking up again.

A surprising 23.6 percent jump in new home sales in June from May offset some disappointing data in recent weeks that sparked fears that the economy may slip back into recession.

The markets are focusing in on more recent data as hopefully being indicative of what's ahead, said Tim Ghriskey, chief investment officer at Solaris Asset Management in New York.

The Dow Jones industrial average <.DJI> added 56.54 points, or 0.54 percent, at 10,481.16. The Standard & Poor's 500 Index <.SPX> gained 8.36 points, or 0.76 percent, to 1,111.02. The Nasdaq Composite Index <.IXIC> rose 14.66 points, or 0.65 percent, to 2,284.13.

The S&P 500 held above the 1,100 level after closing just above that level on Friday, which can be seen as significant since it breaks the bulk of the top end of the trading range for the last several months, according to Bryan McCormick, options strategist at optionMonster.com.

At midday, both the Dow and the Nasdaq were slightly higher for the year to date, while the S&P 500 was within just a few points of break-even following declines from the late April closing highs due to anxiety about the euro zone's debt troubles and the high U.S. unemployment rate.

The big question now is whether the rally has exhausted itself in making the move to resistance ... A strong breakout now would go a long way toward confirming that the index is truly back on a bullish track. A failure would be equally frustrating and would likely see us lapse back into the existing trading range awaiting a stronger catalyst, he said.

He noted that the S&P 500's next big resistance level is at the 200-day moving average, at 1,114.21.

The S&P 500 rose 7.8 percent during the three weeks ended Friday, the largest gain in such a period since the first week of August 2009.

Home building products manufacturer Masco Corp rose 3.9 percent to $11.87 and led gains in the Morgan Stanley housing index <.HGX>, which rose 2.5 percent. Masco is expected to report quarterly results after the closing bell.

Genzyme Corp continued to rise on takeover speculation, as the Wall Street Journal said Britain's GlaxoSmithKline Plc had recently made a very casual approach, to the U.S. biotech company.

Genzyme shot up 6.9 percent to $66.81.

Sources familiar with the matter said on Friday that Sanofi-Aventis was sounding out Genzyme, prompting a 15 percent jump in the U.S. biotech company's market value to $16.7 billion.

BP Plc is expected to install an American known for diplomacy as chief executive, replacing Tony Hayward who has come under fire for his gaffe-prone handling of the worst oil spill in U.S. history. Bob Dudley, the U.S. executive managing the response operation to the spill in the Gulf of Mexico, is poised to get the top job in the next 24 hours, a move that could soften U.S. criticism of the major British oil company, sources close to BP say.

U.S.-traded shares of BP gained 4.9 percent to $38.66.

(Reporting by Angela Moon; Editing by Jan Paschal)

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