Domestic housing data, which came in better-than-expected, combined with a drop in crude prices, helped the markets close narrowly higher on Monday. The S&P 500 hit its highest level since pre-recessionary days in May 2008 as it touched an intra-day high of 1,370.89. However, the Dow dropped marginally, prevented investors from seeing it settle above 13, 000.

The Dow Jones Industrial Average (DJI) closed merely 0.01% lower at 12,981.51. The Standard & Poor 500 (S&P 500) edged up 0.1% and closed narrowly higher at 1,367.59. The Nasdaq Composite Index gained 0.1% and closed yesterday's trading session at 2,966.16. The fear-gauge CBOE Volatility Index gained 515 and settled at 18.19. Consolidated volumes on the New York Stock Exchange, NYSE Amex and Nasdaq were 6.3 billion shares, which was lower than the daily average of 7 billion shares. The advance decline ratio was even at the NYSE, as for 48% of advancing stocks an equal percentage of shares were on the declining side. The remaining 4% of the stocks were left unchanged.

The Dow kept hovering near the 13, 000 mark, making investors wait for the day they could see the blue-chip index settle above that level. The Dow crossed the 13, 000 mark during the day, sparking off speculation about whether if it could finally sustain that level. However, late selling once again dragged the index lower. Nonetheless, fellow-benchmark S&P 500 lifted sentiment, touching its highest levels since May 2008 during yesterday's trading hours. The financial sector led the gains for the S&P 500. The Financial SPDR Select Sector Fund ( XLF ) gained 0.8% and bellwethers such as American Express Company (NYSE: AXP ), Bank of America Corporation (NYSE: BAC ), Citigroup, Inc. (NYSE: C ), JP Morgan Chase & Co. (NYSE: JPM ), Morgan Stanley (NYSE: MS ), Wells Fargo & Company (NYSE: WFC ) and U.S. Bancorp (NYSE: USB ) jumped 1.6%, 2.0%, 1.8%, 2.0%, 1.4%, 2.8% and 2.0%, respectively.

The benchmarks might have mostly finished in the green, but they were bogged down during the initial session after G20 leaders urged Europe to stock up more money to fight its debt crisis. G20 leaders have demanded such a step before international lenders supply more funds to the International Monetary Fund ( IMF ). The G20's financial leaders and their central banks consider this to be an "essential input". The G20 leaders are asking for fund creation to the tune of $1 trillion through the combined efforts of European Financial Stability Fund and the European Monetary Mechanism.

While the markets felt these pressures, better-than-expected housing data came to the rescue and took the benchmarks higher. The National Association of Realtors reported that pending home sales were on an uptrend and well above the year-ago level. According to the report, the Pending Home Sales Index increased 2% to 97 in January, up from a downwardly revised figure of 95.1 in December. The current reading is significantly higher, 8% more than the January 2011 level of 89.8. This was also the index's highest reading since April 2010.

Lawrence Yun, NAR chief economist, said: "Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year". The PHLX Housing Sector (HGX) jumped 1.2% and stocks including D.R. Horton, Inc. (NYSE: DHI ), Lennar Corporation (NYSE: LEN ), Toll Brothers Inc. (NYSE: TOL ) and Comstock Homebuilding Companies (NASDAQ: CHCI ) gained 1.9%, 2.5%, 1.0% and 4.4%, respectively.

A drop in crude prices also helped the broader rally. Increasing fuel prices never bodes well for an economy since it leads to inflationary pressures. The economy is only gradually recovering and incremental oil prices can only create more worries. Thus, a drop in oil prices was largely cheered by the investors. However, the energy sector lost out a on a finish in the green in the process and the Energy SPDR Select Sector Fund ( XLE ) declined 0.3%. Among energy stocks, Exxon Mobil Corporation (NYSE: XOM ), Schlumberger (NYSE: SLB ), Halliburton Company (NYSE: HAL ) and National Oilwell Varco, Inc. (NYSE: NOV ) lost 0.1%, 0.9%, 2.0% and 0.9%, respectively.