US stocks rose sharply Monday, led by large companies like Citigroup Inc and General Electric Co, as investors took the opportunity to buy shares beaten down from 2004 lows hit last week.
The gains more than offset losses in Friday's session, as investors welcomed a dip in the price of oil and warmed to the possibility of a rate cut by the European Central Bank later this week.
"We were poised for a bounce," said Jack Caffrey, equity strategist at J.P. Morgan Private Bank. "People have had a chance to step back and realise that some stocks probably got too cheap."
Investors were encouraged by rising hopes that the European Central Bank's policymakers will cut interest rates when they meet on Thursday. US stock investors would welcome a cut, which should help pick up the pace of Europe's economic recovery and take some pressure off the US Federal Reserve to raise rates.
The continued slide in the price of oil pleased stock investors further, as Opec producers were split on whether to cut production by a million barrels a day beginning April 1 as they had vowed in February.
By midday, the Dow Jones industrial average was up 131.62 points, or 1.29 percent, at 10,344.59. The Standard & Poor's 500 Index was up 15.02 points, or 1.36 percent, at 1,123.08. The technology-focused Nasdaq Composite Index was up 35.12 points, or 1.79 percent, at 1,995.14.
Citigroup Inc was one of the biggest winners in the Dow. Shares of the financial giant rose $1.11, or 2.2 percent, to $51.17 after Prudential Equity Group raised its rating on the company to "overweight" from "neutral."
General Electric Co was the biggest contributor to the S&P 500's gain, rising 58 cents, or 1.9 percent, to $30.68.
Shares of computer maker Hewlett-Packard Co rose sharply after a Barron's article on the weekend said the company was on a path to post-merger success. Its shares rose 98 cents, or 4.4 percent, to $23.34.
The Nasdaq was helped higher by Qualcomm Inc after Schwab Soundview raised its rating on the telecommunications company to "outperform" from "neutral". Its shares rose $3.82, or 6.2 percent, to $65.56.
US-traded shares of Swedish telecoms equipment maker Ericsson also rose sharply after the company said it won a contract from Swisscom Mobile worth nearly $80 million. Ericsson rose $1.50, or 5.6 percent, to $27.85.
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