NEW YORK (CNN/Money) - Stocks closed solidly higher Monday, as a rally in the chip sector and strength in retailers encouraged buying and sent the Dow to its highest close in almost 14 months.

Some of the gains were also fueled by relief that the largest blackout in history, which hit a substantial portion of the Northeast Thursday, did not cause more damage and disruption.

The Nasdaq composite (up 37.48 to 1739.49, Charts) rallied 2.2 percent, clocking the biggest gain of the major indexes. The Dow Jones industrial average (up 90.76 to 9412.45, Charts) bounced 1 percent higher, while the Standard & Poor's 500 index (up 9.07 to 999.74, Charts) scored a gain of 0.9 percent. The Dow closed above 9,400 for the first time since June 20, 2002, when it ended the day at 9,431.76.

"I think part of it is certainly a relief rally that the blackout is behind us," said Michelle Clayman, chief investment officer at New Amsterdam Partners.

But positive news out of the chip sector lifted techs and better-than-expected earnings from Lowe's also sparked buying in the broader market.

Investors looked forward to earnings for Lowe's rival Home Depot, due ahead of the opening bell Tuesday. Home Depot is expected to report earnings of 54 cents a share, up from 50 cents in the same period last year, according to Reuters Research.

Retailers Saks (SKS: up $0.45 to $12.25, Research, Estimates) and Staples (SPLS: up $0.49 to $20.38, Research, Estimates) also were set to post earnings before the open Tuesday.

But, investors could chose to look ahead to a quarterly report from PC maker Hewlett-Packard (HPQ: up $0.73 to $22.13, Research, Estimates), scheduled to post its results after the bell. Wall Street forecasts that HP earned 26 cents a share, up from 14 cents in the year-ago period.

Meanwhile, some economic reports are likely to come into focus. Economists, on average, expect housing starts to have slipped to 1.790 million on an annualized basis in July from 1.803 million in the previous month. Little change also is expected in building permits, forecast to have dropped to 1.817 million in July from 1.803 million in June.

Also due Tuesday, shortly after the opening bell, is the University of Michigan's preliminary reading on consumer sentiment for August. Economists, on average, expect the reading jumped to 91.5 in August from 90.9 in July, according to a survey by Briefing.com.

On the tech front, Advanced Micro Devices (AMD: up $1.11 to $8.91, Research, Estimates) boosted the chip sector Monday. The chipmaker rallied 14.2 percent following a positive article in Barron's on the company's new line of 64-bit microchips. Shares of rival Intel (INTC: up $1.14 to $26.19, Research, Estimates), the world's largest chipmaker, also bumped 4.6 percent higher despite the threat the new AMD chip could pose to its market share.

Within the sector, Broadcom (BRCM: up $1.59 to $22.85, Research, Estimates) pushed 7.5 percent higher, Teradyne (TER: up $1.22 to $17.23, Research, Estimates) edged up 7.6 percent, LSI Logic (LSI: up $0.68 to $10.27, Research, Estimates) gained 7.1 percent, and Cypress Semiconductor (CY: up $1.62 to $15.92, Research, Estimates) bounced 11.3 percent on the news. The Philadelphia Semiconductor Index added 5.2 percent.

Retailers also took center stage. Lowe's (LOW: up $3.06 to $51.96, Research, Estimates) rose 6.3 percent after the home-improvement retailer posted second-quarter earnings of 75 cents a share, up from 59 cents in the year-ago period and beating analysts' average estimate by 6 cents. Wall Street also looked closely at the company's growth prospects and waited for a profit report from rival Home Depot (HD: up $0.36 to $33.90, Research, Estimates) set for Tuesday. Home Depot shares gained 1.1 percent.

The nation's top retailer, Wal-Mart (WMT: up $0.82 to $58.92, Research, Estimates), said back-to-school sales may help it beat its earlier target of a 3 percent to 5 percent gain in August same-store sales. Shares of Wal-Mart bounced 1.4 percent.

Toys "R" Us (TOY: up $0.83 to $12.71, Research, Estimates) advanced 7 percent after the company posted a loss of 5 cents a share for the second quarter, compared with a loss of 8 cents in the same quarter last year and meeting Wall Street's average estimate, according to Reuters Research.

Easing bond yields Monday helped tame investors' concerns about rising interest rates. Treasury prices were up slightly, with the 10-year note yield at 4.47 percent.

The dollar gained against the yen and euro.

Some companies came under pressure Monday in the aftermath of last week's blackout.

Northern Ohio utility FirstEnergy (FE: down $2.86 to $27.75, Research, Estimates) sank 9.3 percent after it said over the weekend that some of its power lines failed before the blackout and that an alarm system to warn about the problem didn't work. Adding pressure, Merrill Lynch cut its rating on the company to "neutral" from "buy" Monday.

Stocks rallied throughout the second quarter but fizzled as the markets entered the typically slow summer months. Though economic news has been encouraging, investors are looking for stronger signs that the economy is on a path to growth, traders said.

"You've got the market in a new recovery high, which is very positive for the short term," said Jack Baker, head of equities at Putnam Lovell Securities. "But I don't know what's going to fuel it from here. I think this is a 'show-me' market."

European markets closed higher Monday. Stocks in Asia also ended the day up. (Check the latest on world markets)

NYMEX light sweet crude oil futures slipped 11 cents to $30.88 a barrel in New York, where COMEX gold sank $4.80 to $359.90 an ounce.

Market breadth was positive, with advancing stocks beating out decliners by about two to one on both the Nasdaq and the New York Stock Exchange. On the Nasdaq, 1.1 billion shares traded, while 1.5 billion shares changed hands on the NYSE.