US stocks surged on Monday as investors drew comfort from lower oil costs and took advantage of the market's recent slide to 2004 lows, loading up on large companies like Hewlett-Packard ahead of the quarterly earnings season.
Declining oil prices helped eased fears that rampantly rising energy costs would crimp corporate profits, while growing hopes for an interest rate cut by the European Central Bank later this week also boosted sentiment.
Stocks had tumbled precipitously in recent weeks as security jitters put investors on guard after train bombings in Spain and Israel's killing of a leader of Hamas.
"There was plenty of money on the sidelines that was just waiting to come in, and the opportunity has arisen, so they've decided to put money to work," said John O'Donoghue, head of listed trading at Credit Suisse First Boston.
Oil prices fell from recent lofty levels amid speculation major oil producing countries might decide not to carry out promised production cuts. OPEC remains split on whether to reduce oil output by 1 million barrels a day beginning April 1 as it had vowed in February.
"Any time you see oil up toward $38 to $40 a barrel, it's worrisome, and once you see it backing off toward $35, it makes people feel a lot better," O'Donoghue said.
Positive comments from Wall Street analysts on marquee names like Citigroup Inc and General Electric also brightened the market's mood.
The Dow Jones industrial average and the technology-packed Nasdaq Composite Index both ended at their highest levels in more than two weeks. The Dow gained 116.36 points, or 1.14 percent, to 10,329.33, while the Nasdaq Composite climbed 32.55 points, or 1.66 percent, to 1,992.57.
The Standard & Poor's 500 Index rose 14.41 points, or 1.30 percent to 1,122.47, more than making up for last week's losses.
Trading was active, with about 1.4 billion shares changing hands on the New York Stock Exchange and about 1.7 billion shares traded on Nasdaq.
HP lead the blue-chip Dow Jones industrial average higher, gaining 3.6 percent, after a report in weekly financial newspaper Barron's said the company was on a path to post-merger success. Its shares rose 81 cents to $23.17.
Citigroup Inc also bolstered the Dow, rising $1.26, or 2.5 percent, to $51.32 after Prudential Equity Group raised its rating on the company to "overweight" from "neutral."
General Electric Co rose 38 cents, or 1.3 percent, to $30.48 after UBS Investment Research raised its rating on the company, citing reduced uncertainty surrounding share issuances for two pending deals.
The Nasdaq was helped by Qualcomm Inc after Schwab Soundview raised its rating on the telecommunications company to "outperform" from "neutral." Its shares rose $3.85, or 6.2 percent, to $65.61.
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 $1.49, or 5.6 percent, to $27.84.