US stocks ended higher on Monday after oil prices settled below $60 a barrel, easing concerns about higher energy costs and renewing investors' enthusiasm for the technology and banking sectors.
But the drop in crude hurt heavily weighted energy shares, capping the market's gains. Dow component Exxon Mobil Corp shed 1.4 percent to $57.10, while Chevron Corp slipped 1.1 percent to $57.40, both on the New York Stock Exchange.
US light crude oil futures for December delivery fell $1.11 to settle at $59.47 a barrel as mild weather across the northern hemisphere and recovering US production eased fears that supplies could run short.
"Energy stocks have been the year's winners, but the weather's been gorgeous and there were a lot of overblown fears with the hurricanes," said Kevin Kruszenski, head of listed trading at McDonald Investments Inc in Cleveland. "So sectors that have been out of favour, mainly technology and the financials, are now providing some leadership, the banks, in particular."
The Dow Jones industrial average rose 55.47 points, or 0.53 percent, to end at 10,586.23. The Standard & Poor's 500 Index advanced 2.67 points, or 0.22 percent, to finish at 1,222.81. The technology-laced Nasdaq Composite Index gained 8.81 points, or 0.41 percent, to close at 2,178.24.
Banking shares such as Citigroup Inc Wachovia Corp and US Bancorp gave the S&P 500 its biggest boost.
Citigroup's stock climbed 1.8 percent, or 83 cents, to $46.43, while Wachovia advanced 1.2 percent, or 62 cents, to $51.33. US Bancorp shares gained 1.4 percent, or 40 cents, to $29.09. All are traded on the NYSE.
Both the Dow and the Nasdaq got a lift from Microsoft Corp, up 1.3 percent, or 35 cents, at $27.01 in Nasdaq trading.
Microsoft, the world's largest software maker, has emerged as the lead suitor for a stake in Time Warner Inc's Internet unit, America Online, or AOL, according to a report by The New York Times. Microsoft is among the 30 stocks in the blue chip Dow average, but it trades on Nasdaq.
The stock of utility company TXU Corp jumped 7.9 percent, or $7.41, to $101.24 after it said it would split its stock, buy back shares and sharply boost its dividend. On October 3, TXU hit a 52-week high of $116.59.
In other company news, natural gas producer El Paso Corp reported a larger third-quarter loss, hurt by a big charge and declining revenue.
El Paso shares slumped 5.8 percent, or 70 cents, to $11.31.
Shares of Guidant Corp fell 2.4 percent, or $1.40, to close at $57.52 on the NYSE after the medical device maker on Monday sued to force Johnson & Johnson to complete an agreed $25.4 billion take-over, posted lower third-quarter profits and reported a widening probe by federal investigators.
Shares of Johnson & Johnson, a Dow component, rose 0.9 percent, or 55 cents, to close at $61.43 on the NYSE.
Trading was active on the NYSE, with about 1.47 billion shares changing hands, just above last year's daily average of 1.46 billion, while on Nasdaq, about 1.62 billion shares traded, below last year's daily average of 1.81 billion.
Advancing stocks outnumbered declining ones by a ratio of about 9 to 7 on the NYSE and by about 5 to 4 on the Nasdaq.