U.S. stocks closed higher on Monday, recovering from Friday's sharp decline as investors took a more positive outlook on the strong jobs report.
"We're bouncing back a little bit from Friday's selloff," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management. "Cooler heads prevail. People realize a great economy is good."
Investors saw a June rate rise more likely after February's nonfarm jobs report showed a gain of 295,000, above expectations of 240,000 in February, down from 257,000 in January.
The unemployment rate fell to 5.5 percent, while hourly wages ticked up 0.1 percent, below consensus and off the surprise 0.5 percent gain in January.
"I certainly think (the market) is very worried about the Fed, (which) created this financial market dream world environment," said Jack Ablin, chief investment officer at BMO Private Bank. "As I thought about it over the weekend, ultimately the economy should prevail."
"I'd rather have strong economic news and the Fed's going to tighten than weak economic data and the Fed has no ammunition," Ablin said.
The JOLTS report is due Tuesday along with wholesale trade data followed by the monthly Federal budget statement on Wednesday. Arguably the most noteworthy release will be February retail sales figures on Thursday.
"There's no economic news (on Monday) so markets are going to reassess Friday's employment data," said Peter Cardillo, chief market economist at Rockwell Global Capital. "Friday's (selloff) was over-exaggerated. The market is catching its breath here."
Earnings due after the bell Monday include Urban Outfitters, Casey's General, United Natural Foods.
"This is a week we think about the consumer," said Art Hogan, chief market strategist at Wunderlich Securities. He added that most of the corporate news of the day, from the Apple Watch to McDonald's same-store sales miss, was priced in.
Read MoreHere's what could sting stocks in the week ahead
Monday is the that began after the recession. The Dow briefly added more than 150 points but failed to close above 18,000. The S&P 500 closed up 0.40 percent, while the Nasdaq was within 100 points of the 5,000 level it breached last Monday for the first time since March 2000.
"I think it's just a bounce," said Peter Boockvar, chief market analyst at The Lindsey Group. "This market has ignored Greece for a while."
In Europe, equities ended lower on Monday amid speculation that Friday's better-than-expected U.S. jobs report will lead the Fed to hike rates soon.
The European Central Bank launched its 60 billion euro-a-month ($66.3 billion) bond-buying program on Monday and euro zone finance ministers also discussed Greece's reform plans.
"With respect to markets ex Greece, there will again be little worry of a spillover as I'm sure Europe will find a way to lend Greece money that will in turn be used to pay back previous European loans," Boockvar said in a note.
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Other analysts highlighted other factors affecting the market besides the economy and the Fed.
"We think the market has not fully reflected the slowdown that's going to happen in 2015," said Nick Raich, CEO of The Earnings Scout. "Investors are paying more today for less growth."
He pointed out that stocks are now trading at 17.5 times earnings versus 15.5 times earnings in 2014. In addition, last year at this time analysts had expected growth of 9.5 percent in the second quarter of 2014, while today "we're looking at basically flat," Raich said.
During its first event of the year on Monday, Apple announced that its entry model Watch starts at $349 and will begin shipping on April 24.
The iPhone maker's stock closed up 0.43 percent at $127.14 a share. Immediately following the event, the stock fell as much as 1 percent, near $125 a share, after rising as high as 2.4 percent during the event. The stock touched a record price of $133.60 a share on Feb. 24.
The stock traded 88.3 million shares on Monday, surpassing its 30-day average of 63.2 million shares.
Time Warner closed up 1.28 percent at $85.20 a share on news that Apple will partner with HBO for a video streaming service called HBO Now.
Read More Apple unveils Watch, MacBook, cheaper Apple TV
General Motors will buy back $5 billion in stock, and commit to returning any cash above $20 billion in the future to shareholders. Activist investor Harry Wilson has agreed to drop his bid to join the GM board following that announcement.
McDonald's reported comparable-store sales that fell globally and in the United States, sharply missing expectations of a mild decline.
Alcoa is buying metals producer RTI International Metals in a $1.5 billion stock transaction.
Read MoreEarly movers: GM, RTI, AMZN, AAPL, BBRY & more
Goldman Sachs issued a "buy" on Exxon Mobil as it said the firm is the only one of the oil majors that will generate positive free cash flow in 2016, and will have the cash the make acquisitions going forward.
Major U.S. Indexes
The Dow Jones industrial average closed up 138.94 points, or 0.78 percent, at 17,995.72, with United Technologies leading gains and Intel the greatest laggard.
The closed up 8.17 points, or 0.39 percent, at 2,079.43, with industrials leading eight sectors higher and energy the greatest laggard.
The Nasdaq closed up 15.07 points, or 0.31 percent, at 4,942.44.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded just under 15.
Advancers were a step ahead of decliners on the New York Stock Exchange, with an exchange volume of 739 million and a composite volume of 3.3 billion in the close.
The U.S. 10-year Treasury note yield was 2.20 percent. The U.S. dollar traded flat against major world currencies, near 11-year highs. The euro continued to hold lower, below $1.09.
As of Friday's close, the dollar index was within 2.5 standard deviations above its 50-day moving average. Since 1986 the index has been in this position 1.80 percent of all trading days, according to quantitative data analytics tool Kensho. The probability of the index moving higher is 18.6 percent and the probability of the index moving lower is 81.4 percent.
Crude oil futures settled up 39 cents, or 0.79 percent, to $50.00 a barrel on the New York Mercantile Exchange. Gold futures settled up $2.20 to $1,166.50 an ounce.
On Friday, U.S. stocks closed down more than 1 percent, with the Dow off about 300 points, as investors weighed the jobs report.
As of Friday's close:
- The Dow Jones industrial average was within half a standard deviation above its 50-day moving average. Since 1981 the index has been in this position 4.65 percent of all trading days, Kensho analysis showed. The probability of the index moving higher in the days following is 53.7 percent and the probability of it moving lower is 46.3 percent.
- The S&P 500 was within half a standard deviation above its 50-day moving average. Since 1980 the index has been in this position 5.21 percent of all trading days, according to Kensho. The probability of the index moving higher in the days following is 51.5 percent and the probability of it moving lower is 48.5 percent.
- The Nasdaq composite was within half a standard deviation below its 50-day moving average. Since 1980 the index has been in this position 4.58 percent of all trading days, according to Kensho. The probability of the index moving higher in the days following is 59.1 percent and the probability of it moving lower is 40.9 percent.
—CNBC's Jenny Cosgrave and Peter Schacknow contributed to this report.
Disclosure: CNBC's parent NBCUniversal is a minority investor in Kensho.
On tap this week:
Monday
Earnings: Urban Outfitters, Casey's General, United Natural Foods
7:30 pm: Dallas Fed President Richard Fisher
Tuesday
Earnings: Barnes and Noble, Surgical Care Affiliates, Analogic, China Lodging Group, Habit Restaurants, NCI Building Systems, Verifone
9:00 am: NFIB
10:00 am: JOLTs
10:00 am: Wholesale trade
1:00 pm: $24 billion three-year notes auction
Wednesday
Earnings: Express, Vera Bradley, Box, Home Inns and Hotels, Krispy Kreme, Men's Wearhouse, Shake Shack
7:00 am: Mortgage applications
1:00 pm: $21 billion 10-year notes auctions
Thursday
Earnings: Dollar General, Hovnanian, Vail Resorts, El Pollo Loco, Springleaf, Aeropostale, OncoMed, JA Solar
8:30 am: Weekly jobless claims
8:30 am: Retail sales
8:30 am: Import prices
10:00 am: Business inventories
1:00 pm: $13 billion 30-year bond auction
Friday
Earnings: Ann
8:30 am: PPI
10:00 am: Consumer sentiment
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