* Dollar down for second straight day
* Fed to release minutes of July meeting on Wednesday
* Philadelphia semiconductor index hits 16-year high
* Indexes up: Dow 0.45 pct, S&P 0.44 pct, Nasdaq 0.7 pct (Updates to early afternoon)
By Yashaswini Swamynathan
Aug 15 (Reuters) - U.S. stock indexes climbed to all-time highs on Monday, building on their record-setting rallies of the past few weeks, as raw materials stocks surged.
The S&P 500 materials index rose 1.06 percent to a one-month high, with all its components in the black, as the dollar index fell for the second straight day.
Better-than-expected corporate earnings in the latest quarter, coupled with expectations that the Federal Reserve would continue to keep rates low, have stoked appetite for U.S. equities.
Since July, the S&P 500 index has notched 13 record intraday highs, including on Monday.
The CBOE volatility index also called Wall Street's "fear gauge" edged up slightly, but remained near year-lows suggesting the markets were in a risk-on mode.
"Our sense is that we're still in this Goldilocks period where it's a sweet spot for equities and that will not change probably until the next rate hike," said Mike Bailey, director of research at FBB Capital Partners.
The Federal Reserve releases on Wednesday the minutes of its July meeting that could provide clues on its plans to raise rates and its view on the health of the economy.
Still, traders are largely skeptical of a rate hike in the near term, with U.S. inflation below the Fed's 2 percent target and as central banks worldwide unleash stimulus programs to support their economies.
The odds of a hike in September stand at 12 percent, rising to about 38 percent for December, according to CME Group's Fedwatch tool.
At 12:26 p.m. ET (1626 GMT), the Dow Jones Industrial Average was up 82.73 points, or 0.45 percent, at 18,659.2.
The S&P 500 was up 9.69 points, or 0.44 percent, at 2,193.74.
The Nasdaq Composite was up 36.42 points, or 0.7 percent, at 5,269.32.
Post Properties hit a record high after the company agreed to be bought by Mid-America Apartment Communities for about $3.88 billion. Mid-America's shares fell 5.8 percent.
Xylem rose 3.6 percent after the water technology company said it would buy Sensus USA for about $1.7 billion in cash.
"The fact that any company would make a multi-billion dollar deal today also speaks of confidence in the U.S. market," Bailey said.
Apple rose 1.1 percent to $109.34 and gave the biggest boost to the S&P and the Nasdaq, while the Philadelphia SE semiconductor index touched a 16-year high.
Twitter rose 6.2 percent to an eight-month high after the New York Times reported the company was in talks to bring its app to the Apple TV platform.
Advancing issues outnumbered decliners on the NYSE by 2,110 to 792. On the Nasdaq, 1,998 issues rose and 782 fell.
The S&P 500 index showed 33 new 52-week highs and no new lows, while the Nasdaq recorded 130 new highs and 24 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)