Stocks closed higher Monday, with the Dow and S&P breaking a three-day losing streak, ahead of a crucial vote on austerity measures in Greece and after banking regulators announced capital rules that were less burdensome than expected.
The Dow Jones Industrial Average gained 108.98 points, or 0.91 percent, to end at 12043.56, led by BofA , AmEx and Microsoft , marking its biggest daily gain in over two months.
The S&P 500 rose 11.65 points, or 0.92 percent, to finish at 1,280.10.
The tech-heavy Nasdaq climbed 35.39 points, or 1.33 percent, to close at 2,688.28.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, slipped to end below 21.
Techs, consumer discretionary and banks were the biggest gainers among the S&P sectors.
"The entire summer can be dictated by the next two weeks—Greece and jobs," said Todd Schoenberger, managing director of LandColt Trading.
“Greece is still the top on traders’ minds—the debate begins in Greece tonight and there are also organized protests,” noted Schoenberger. “There is nervousness and uneasy feeling, and you’re going to see volatility for the rest of the week up until Friday.”
The Greek parliament was debating a fresh austerity package but the government is fragile and analysts fear that it may not pass. The euro slipped against the dollarahead of the vote.
Meanwhile, French President Nicholas Sarkozy offered a solution for banks to roll over holdings of Greek debt for 30 yearsas the Greek government fought to support the austerity plan to avoid a default.
"We're still a couple years away from Greek default," Marc Chandler, currency strategist at Brown Brothers Harriman told CNBC. "I know many people think it's imminent, but the European officials will do everything they can to prolong [a default]...so that banks in Europe will be stronger and better prepared to deal with it."
Financials gained after regulators proposed higher tier one capital ratios for big and systemically important banks over the weekend in effort to stabilize the system.
Meanwhile, Rochdale Securities vice president for equity research Dick Bove said BofA stock is "massively undervalued."
Rivals Citigroup and Morgan Stanley were also trading higher. But despite the day's rally, the sector is still the worst performer in 2011.
The Bank for International Settlements said interest rates must rise in order to fight global inflation and that delays in cutting budget deficits may make the sovereign crisis even worse.
Oil prices were mixedwith U.S. light, sweet crude slipping 55 cents to settle at $90.61 a barrel, while London Brent crude gained 87 cents to settle at $105.99.
Among techs, Microsoft rose ahead of an anticipated release of a version of the software giant's Office that is accessible via the Internet. Microsoft is the best performer on the Dow for June, the first time the tech giant has outperformed the blue-chip index on a monthly basis.
Cisco gained even after the tech bellwether was cut to "neutral" from "outperform" by Cowen. Cisco is the worst performer on the Dow this year.
However, chipmakers Broadcom and Nvidia slipped.
Meanwhile, the Supreme Court said the government cannot ban the sale of violent video games to minors as it would violate free-speech rights. Shares of Take-Two Interactive and Activision Blizzard gained following the rule.
LDK Solar jumped after the Chinese solar company said it plans to buy back up to $100 million of its undervalued American Depository shares (ADSs).
Disney gained even after Nomura cut its price target on the media conglomerate to $45 from $47.
GSV Capital jumped after the investment fund said it has taken a small stake in Facebookthat values the social networking site at about $70 billion.
In M&A news, Continucare skyrocketed more than 30 percent after Metropolitan Health Networks offered by acquire the health care firm for about $416 million.
And LeapFrog gained after the CEO of the educational toy maker said the firm is open to the idea of being acquired.
Treasury prices extended lossesafter the government auctioned $35 billion in 2-year notes, which had a a high yield of 0.395 percent and a bid-to-cover of 3.08. Auctions of 5-year notes and 7-year notes are expected Tuesday and Wednesday, respectively.
President Obama is due to meet Senate leaders to discuss about raising the U.S. debt ceiling, with an Aug. 2 deadline approaching.
On the economic front, consumer spending was largely unchanged in May for the first time in almost a year, according to the Commerce Department, while a reading on Midwest manufacturing rose slightly in May from the prior month.
European shares ended higher, after falling for eight straight weeks, amid hopes of a solution to Greece's debt problem.
On Tap This Week:
TUESDAY: S&P Case-Shiller home price index, consumer confidence, 5-yr note auction, IMF board to select new chief
WEDNESDAY: Weekly mortgage apps, pending home sales index, oil inventories, 7-yr note auction, farm prices, Dell analyst meeting, Fed meeting on card fees; Earnings from Family Dollar, General Mills, KB Home, Monsanto
THURSDAY: Weekly jobless claims, Fed's Bullard speaks, Chicago PMI, End of QE2, Marathon Oil split takes place
FRIDAY: Consumer sentiment, ISM mfg index, construction spending, Biden's deadline for deficit plan, HP launches TouchPad, auto sales
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