U.S. stocks closed more than 1 percent higher on Monday amid encouraging talk of stimulus in Asia, as investors eyed the week's economic data.
"This would be the first back-to-back positive close we've had this month," said Art Hogan, chief market strategist at Wunderlich Securities ahead of the close. "That is remarkable in it of itself."
Hogan made his remarks after the Dow Jones industrial average opened more than 150 points up following positive economic data. "We got a coil spring effect, and often times that doesn't hold," he said.
Personal income in February was mostly in-line with consensus, posting a gain of 0.4 percent, above expectations of 0.3 percent. Consumer spending rose 0.1 percent.
Pending homes sales were up 3.1 percent in February, driven primarily by sales in the West and Midwest.
The Dow Jones industrial average gained more than 260 points. The S&P 500 rose more than 1 percent, with energy leading sector advancers with an increase of more than 2 percent as oil prices fell.
"Eased tensions in the Middle East and benign economic data gave bargain hunters some motivation to step in," James Meyer, chief investment officer at Tower Bridge Advisors, said in a note. "This morning there are a slew of merger deals. Merger activity is often a catalyst for a stronger stock market, as it paints a picture that suggests corporations see bargains out there in the market."
Oil declined as discussions over Iran's nuclear program indicated a possible end to sanctions and an increase in Iranian oil exports. Fighting continued in Yemen.
Several pharmaceutical firms announced deals before the open.
Auspex Pharmaceuticals is being bought by Teva for $101 per share, or $3.2 billion in cash. Auspex, which went public last year, specializes in treatments for patients with movement disorders and other rare diseases.
"Certainly we're still seeing a fair amount of Merger Monday. I think that's giving the market something to jump on," said Paul Nolte, portfolio manager at Kingsview Asset Management. "The fact that I'm buying your company is that I see value in your company. ... (But) not all mergers are good a year or two later."
Tuesday marks the end of the first quarter, and few earnings are expected in the abbreviated trading week. The primary data point for the week is the key March employment report, which comes out on Friday when markets are closed for Good Friday.
"Sounds like what sparked some of the rally was easing and things in China," said Randy Frederick, managing director of trading and derivatives at Charles Schwab. "This looks like it could be a fairly quiet week. (Whenever) you get a 3-day weekend the market gets a little quiet."
European stocks climbed amid encouraging euro zone economic reports. China's benchmark Shanghai Composite index hit a fresh seven-year high as markets interpreted weekend comments from Zhou Xiaochuan, governor of the People Bank's of China, as indication of further stimulus. Zhou warned on Sunday that the world's second-largest economy needs to be vigilant for signs of deflation.
"In terms of technicals this is just noise," said Peter Boockvar, chief market analyst at The Lindsey Group. "This is just trading within a range (of 2,040 and 2,110 in the S&P 500). ... We need to see earnings season before we know which way to go."