NEW YORK (TheStreet) -- The S&P 500 smashed its way through 2,000 on Monday, bolstering the case that the current rally will continue.

Markets gains were propelled by Burger King's (BKW)  announcement that it's in talks to buy Tim Hortons (THI) , among other proposed deals, along with new confidence in Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi.

The broad-based S&P 500 advanced 0.48% to settle at 1,997.92 after trading as a high as 2,001.95. The Dow Jones Industrial Average rose 0.44% to 17,076.87. The Nasdaq added on 0.41% to 4,557.35.

The recent rise in stocks is due in part to Yellen's apparent ability to convert bond investors to her view that labor market improvement will ultimately good for the broad economy. Yellen has argued that just because the rate of unemployment comes down, that doesn't necessarily mean interest rates are bound to go up.

At the annual central bankers symposium at Jackson Hole last week, Yellen managed to reinforce to investors why interest rates will possibly stay lower for longer, and that's been a big support for equity prices on Monday. Meanwhile Draghi used Jackson Hole as a venue to explain why the ECB is closer to a round of quantitative easing as early as September.

"When you think about these two things, you've got an even further underpinning for the stock market, which has been predicated by ultra-low interest rates," said Andrew Wilkinson, chief market analyst at Interactive Brokers. "2,000 has a high gravitational pull as the economy has been recovering, the labor market has improved and as interest rates have remained low."

Positive economic news and traders front-running the view that Yellen would stay dovish pushed the broader market to its best weekly return in the last four months last week. However, most indices settled on a muted note on Friday after markets initially fizzled on a lack of surprises from Yellen and Draghi before regaining momentum on their accommodative remarks over the weekend.

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Deals news was certainly heating up Monday, led by Burger King's disclosure that it's in talks to buy Tim Hortons, the Canadian coffee-and-doughnut chain, and form a new publicly listed company based in Canada. Burger King surged 19.51% to $32.40 and Tim Hortons soared 18.91% to $74.72.

DirecTV (DTV) shares rose 1.09% to $85.47 after the New York Post reported that AT&T (T) - Get AT&T Inc. Report has agreed with the federal government on the conditions paving the way for the telecom giant to buy the satellite TV company.

Roche (RHHBY) announced Sunday an $8.3 billion acquisition of InterMune (ITMN) and its idiopathic pulmonary fibrosis drug Esbriet. InterMune jumped 35.41% to $72.85.

Engine Capital LP, which along with a partner controls more than 1% of Ann (ANN) stock, believes a strategic or private-equity buyer would be willing to pay between $50 and $55 a share for the women's retailer, 47% above Friday's closing price of $37.52 at the high end, the Journal reported, citing people familiar with the matter. Ann shares popped 6.45% to $39.94.

"Companies have been building their war chests of cash...used for a few different things to bring value to shareholders," said Jonathan Corpina, senior managing partner at Meridian Equity Partners. "These actions are viewed as positives and will move stocks and the broader markets higher."

--By Andrea Tse in New York

Follow @AndreaTTse