U.S. stocks closed higher Monday, with consumer discretionary and health care stocks among the top gainers, as oil prices pared most of their overnight losses.
"I think the market's up because of crude," said JJ Kinahan, chief strategist at TD Ameritrade.
All three major averages reversed an opening decline to close at their highest levels of the year so far.
The Dow held about 106 points higher in the close, above the psychologically key 18,000 level for the first time since July 20, 2015. (Tweet This) Earlier, the index topped the level for the first time in intraday trade since July 21, 2015. Walt Disney contributed the most to gains in the index, followed by Home Depot and Chevron. Apple contributed the most to declines.
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"It's pretty amazing we're back to the levels we're at," Kinahan said. "The encouraging thing to me is we're getting strength from somewhere different every day."
U.S. crude oil futures settled down 58 cents, or 1.4 percent, at $39.78 a barrel for its first four-day losing streak since late March. Traders noted some support for crude, at least in the short term, from news that Kuwait significantly cut production due to an oil-worker strike.
Overnight, WTI fell more than 6.5 percent overnight after producers on Sunday failed to reach an output freeze agreement at a meeting in Doha, Qatar.
Energy recovered an initial 1 percent decline to close more than 1.5 percent higher to lead all S&P 500 sectors higher.
"I think a lot of people were short some energy names going into Doha and they're scrambling to cover," said Jeremy Klein, chief market strategist at FBN Securities.
Consumer discretionary and health care were the second and third best performers in the S&P.
Shares of Walt Disney closed nearly 3 percent higher. Pivotal Research upgraded Disney to "buy" from "hold," saying many investor concerns are already priced into the stock. Separately, Disney's "The Jungle Book" won the weekend box office by a wide margin, taking in $103.6 million in North American ticket sales and ranking as the second best ever April opening.
Hasbro surged nearly 5.8 percent to close at a record high after beating estimates by 14 cents with quarterly profit of 38 cents per share, while revenue topped analyst forecasts by a wide margin as well. Hasbro's results were powered by toys based on "Star Wars: The Force Awakens."
Shares of Mattel also hit a fresh 52-week high.
"I think the equity market's holding up pretty well considering oil is as down as much as it is," said Jack Ablin, chief investment officer at BMO Private Bank.
"Once a bottom was put in oil in the 20s then the uncertainty surrounding oil and its impact surrounding oil and the financial markets certainly dissipated," he said.
Overnight, WTI dropped more than 6.5 percent after no agreement emerged from the Sunday meeting of major oil producers in Doha, Qatar.
Also on Sunday, Kuwait reduced its crude oil output and refining production as part of an emergency plan to help the OPEC member deal with the largest petroleum workers' strike in years, Reuters said. The news wire also cited a tweet from Kuwait Oil Company's account that said the company had cut crude output to 1.1 million barrels per day from its normal production level of about 3 million barrels a day.
An official from state refiner Kuwait National Petroleum told Al-Arabiya television on Monday the country plans to increase crude oil production to normal levels, Reuters reported.
"Although oil is key, earnings will be the focus this week," said Peter Coleman, head trader at Convergex, noting that oil would not be as significant a drag on stocks as long as it held above $35 a barrel.
"Earnings were down but they beat expectations," he said.
Morgan Stanley posted better-than-expected earnings per share with revenue coming in roughly in line. IBM and Netflix are set to report after the close.
New York Fed President William Dudley said Monday morning that the normalization of monetary policy will likely remain "gradual and cautious" due to "significant uncertainties" and continued "headwinds to growth" from the financial crisis.
Treasury yields turned higher, with the 2-year yield near 0.74 percent and the 10-year yield around 1.77 percent.
The U.S. dollar index was slightly lower, with the euro near $1.131 and the yen around 108.8 yen against the greenback.
The NAHB housing index was reported ahead of schedule, with the housing market index at 58 in April, unchanged from March, Reuters said.
Major U.S. Indexes
European stocks closed 0.4 percent higher.
Asian stocks closed lower, with the Nikkei 225 off 3.4 percent and the Shanghai composite ending 1.4 percent lower.
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The Dow Jones industrial average closed up 106.70 points, or 0.60 percent, at 18,004.16, with Disney leading advancers and Apple the greatest decliner.
The closed up 13.61 points, or 0.65 percent, at 2,094.34, with energy leading all 10 sectors higher.
The Nasdaq composite closed up 21.80 points, or 0.44 percent, at 4,960.02.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, edged lower to near 13.
About 11 stocks advanced for every two decliners on the New York Stock Exchange, with an exchange volume of 834 million and a composite volume of nearly 3.3 billion in the close.
Gold futures for June delivery settled 40 cents higher at $1,235 an ounce.
—CNBC's Peter Schacknow and Reuters contributed to this report
On tap this week:
Monday
Earnings: IBM, Netflix
7 p.m. Boston Fed President Eric Rosengren
Tuesday
Earnings: Goldman Sachs, Johnson & Johnson, UnitedHealth, Harley-Davidson, Kansas City Southern, Northern Trust, TD Ameritrade, Intel, Yahoo, Discover Financial, VMWare, Intuitive Surgical
8:30 a.m. Housing starts
Wednesday
Earnings: American Express, Coca-Cola, Abbott Labs, EMC, SLM, F5 Networks, Mattel, United Continental, Qualcomm, Stryker, Las Vegas Sands, Tractor Supply, Yum Brands, U.S. Bancorp, Illinois Tool Works, Canadian Pacific Railway, St. Jude Medical
10 a.m. Existing home sales
Thursday
Earnings: Alphabet, Microsoft, General Motors, Visa, Starbucks, Bank of NY Mellon, Biogen, Under Armour, Southwest Air, Stanley Black and Decker, Imax, Novartis, Union Paicific, DR Horton, Fifth Third, Johnson Controls, Pulte Group, Polaris, Alaska Air, Verizon, Travelers, E*Trade, Norfolk Southern, Boston Beer
8:30 a.m. Initial claims
8:30 a.m. Philadelphia Fed survey
9 a.m. FHFA home prices
Friday
Earnings: General Electric, Caterpillar, McDonald's, Honeywell, AutoNation, American Airlines, Synchrony Financial, Kimberly-Clark, SunTrust, LyondellBasell, Steve Madden, Daimler
9:45 a.m. Manufacturing PMI
*Planner subject to change.
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