The Dow surges more than 150 points, clawing back much of last week's losses.

NEW YORK (TheStreet) -- The major U.S. stock averages were soaring Monday as positive housing market data gave extra mileage to a rally fueled by optimism over budget talks in Washington.

Upbeat earnings reports from Lowe's(:LOW) and Tyson Foods (:TSN) also boosted investor confidence after last week's deep pullback. The surge occurred despite rising tensions in the Middle East as Israeli and Palestinian forces continued to exchange rocket fire in the Gaza Strip area.

At last check, the Dow Jones Industrial Average was up nearly 168 points, or 1.33%, at 12,756. The blue-chip index, which has lost ground in five of the past six weeks, started the session up 3.03% in 2012.

Twenty-nine of the Dow's components were in the green. The lone exception was Intel(:INTC), which was down incrementally after surprising Wall Street with news that Paul Otellini plans to retire from the chip giant's chief executive officer in May.

The biggest blue-chip winners were Bank of America(:BAC), Hewlett-Packard(:HPQ), JPMorgan Chase(:JPM), and Verizon(:VZ).

The S&P 500 was gaining more than 21 points, or 1.58%, at 1381, while the Nasdaq was climbing by 51 points, or 1.78%, at 2904.

All sectors in the broad market were trading higher, with capital goods, basic materials, conglomerates, transportation and technology leading the way.

Advancers were outpacing decliners by about a ratio of 6-to-1 on the New York Stock Exchange and 3.4-to-1 on the Nasdaq. Volumes exceeded 2.20 billion on the Big Board and 1.18 billion on the Nasdaq.

"The markets are particularly sensitive to the wrangling among the opposing parties in Washington, rising and falling on the hopes of a deal," said Paul Nolte, managing director at Dearborn Partners, of the fiscal cliff negotiations.

U.S. budget discussions are expected to continue behind the scenes in Washington this week as President Barack Obama makes his tour through Asia. The president has provided reassurances that a U.S. budget agreement will be reached on time.

"Attention remains centered on the fiscal cliff," said Michala Marcussen, global head of economics at Societe Generale. "Recent developments give grounds for some cautious optimism, but history suggests that politics can be notoriously fickle. Our base case remains that a temporary extension is voted before year-end with a final agreement in early 2013. This will lift uncertainty and remove a significant headwind to recovery."

Monday's data provided some of the impetus for the rally. The National Association of Realtors reported sales of existing homes increased in October, even with some regional impact from Hurricane Sandy, by 2.1% to a seasonally adjusted annual rate of 4.79 million from a downwardly revised 4.69 million in September.

Sales were 10.9% above the 4.32 million-unit level in October 2011.

Economists, on average, expected an annual rate of 4.75 million for existing home sales in October.

The National Association of Home Builders' housing market index rose to a level of 46, which was better than the unchanged level of 41 predicted by economists.

"Overall, a strong reading on the housing market," said Ian Lyngen, a senior rates strategist at CRT.

The FTSE 100 in London closed up by 2.36%, while the DAX in Germany finished higher by 2.49%. Eurozone finance ministers are scheduled to hold a meeting in Brussels on Tuesday about extending more financial aid to Greece.

Japan's Nikkei average finished higher by 1.43% Monday amid rising anticipation of an opposition party victory in December, which is expected to result in the push for monetary easing. Hong Kong's Hang Seng index settled up 0.49%.

Gold for December delivery rose $19.70 to settle at $1,734.40 an ounce at the Comex division of the New York Mercantile Exchange, while January crude oil contracts were up $2.70 at $89.62.

The benchmark 10-year Treasury was falling 10/32, boosting the yield to 1.614%. The dollar was down 0.38%, according to the U.S. dollar index.

In corporate news, shares of Lowe's were up more than 6% after the home improvement products retailer posted third-quarter results that exceeded forecasts as revenue at stores opened at least a year rose 1.8%.

Cisco Systems(:CSCO), the networking giant, announced Sunday it was buying cloud computing company Meraki for $1.2 billion. Cisco's stock was up more than 1.5%.

Global orthopedic medical device company Wright Medical Group(:WMGI) struck a deal to buy BioMimetic Therapeutics (: BMTI ) for roughly about $190 million in cash and stock to boost growth opportunities in Wright's extremities business. Wright shares were sliding more than 2.5%, while BioMimetic shares were soaring by over 77%.

Republic Services(:RSG) shares were rising nearly 1.5% as Cascade Investments raised its stake in the provider of services in the domestic non-hazardous solid waste industry to 23%.

BP's(:BP) American Depositary Receipts were rising over 2.5% amid reports that the oil giant plans to spend as much as $5.9 billion repurchasing stock.

Shares of Tyson Foods jumped more than 7.5% after the company posted better-than-estimated fourth-quarter earnings as strength returned to its chicken business.

News Corp(:NWSA) is expected to announce this week that it will acquire a 49% in the YES Network from the New York Yankees and its partners, according to Reuters, which cited a person with knowledge of the talks. The deal would value the sports channel at $3 billion, Reuters said. Shares were advancing by nearly 2.5%.

-- Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.

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