"Equities are enjoying a relief rally this morning as the imminent threat from Cyprus appears to have been abated, but where the markets go from here remains to be seen," wrote Mike McCudden, head of derivatives at stockbroker Interactive Investor.
(Read More: Cyprus Relief: Why the Rally May Be Short Lived)
"Despite a deal being struck for Cyprus, it will set an unsettling precedent for future bailouts and investors will once again be concerned over the security of their bank deposits," wrote McCudden. "Furthermore, investors should question why the regulators allowed the Cypriot banking system to rise to this size, given the experiences in Iceland and Ireland."
Last week, major averages finished in the red for the week, with the Dow snapping a four-week win streak and the S&P 500 logging its second losing week this year.
(Read More: Where's the Long Awaited Market Correction?)
Among earnings, Dollar General rose after the discount retailer posted earnings that beat expectations and said this year's sales growth could top the strength it saw in 2012.
Apollo Group surged after the for-profit education company posted a better-than-expected profit and reaffirmed its full-year forecast.
Elsewhere, shares of Dell jumped after the company confirmed it had received competing offers from Blackstone Group and billionaire investors Carl Icahn as the computer giant looks to go private. The offers come as the company agreed to a $24.4 billion deal to be taken private by private equity firm Silver Lake.
Facebook edged higher after U.S regulators approved a plan to compensate market makers who lost money in the social-media giant's IPO on the Nasdaq last May.
Apple traded higher after the tech giant acquired WiFiSlam, a startup company that makes mapping applications for smartphones.
Also among techs, BlackBerry extended sharp losses from last week after the smartphone maker's new BlackBerry Z10 launch failed to generate buzz. In addition, Goldman Sachs cut its rating on the company to "neutral" from "buy."
Vodafone rallied amid a U.K.'s Sunday Times report that said telecommunications company was looking to sell its 45 percent stake in its U.S. Verizon Wireless unit.
On Sunday, Reuters reported the International Monetary Fund is planning to cut its 2013 U.S. growth forecast from 2 percent to 1.7 percent, due to higher taxes and spending cuts, citing a draft of the IMF's next World Economic Outlook report seen by Italian news agency ANSA.
Federal Reserve Chief Ben Bernanke and the International Monetary Fund's Olivier Blanchard are expected to speak at the London School of Economics later this afternoon.
In addition, New York Federal President Bill Dudley is scheduled to speak at the Economic Club of New York at 12:30 pm ET.