Stocks closed near session highs Monday, fueled by a merger between two big Greek banks, a better-than-expected personal spending report and as the damage from Hurricane Irene over the weekend was less than feared.
The Dow Jones Industrial Average soared 254.71 points, or 2.26 percent, to finish at 11,539.25. BofA and Hewlett-Packard led the blue-chip gainers, while Home Depot was the only laggard on the index.
The S&P 500 surged 33.28 points, or 2.83 percent, to end at 1,210.08, above the critical 1,207-level that traders closely track.
“[When the S&P finishes above 1,207], some people make a case that it opens up a threshold to a new higher level," Art Cashin, director of floor operations at UBS Financial Services told CNBC.
The Nasdaq jumped 82.26 points, or 3.32 percent, to close at 2,562.11.
Despite the day's strong rally, all three major indexes are still on track for their biggest monthly declines since May 2010.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 33.
All 10 S&P sectors ended higher, led by techs and financials.
Trading volume was lighter than usual with the consolidated tape of the NYSE at 3.47 billion shares, while 912 million shares changed hands on the floor ahead of a holiday weekend and as some commuters in the New York City area faced difficulties getting to work.
“We’re going into a holiday week and after all we’ve experienced last week, people are just going to look to unwind positions,” Matt Cheslock, managing director at Cohen Capital Group told CNBC. “People take risk off the table where they can—There’s no reason why you wouldn’t do that today especially in the face of all the momentum we’ve seen to the upside.”
Financials rallied across the board following news of a merger between two banks: Eurobank and Alpha Bank. The deal is expected to trigger more M&A activity to shore up the sector hammered by a severe debt crisis. European stocks closed higher, with Greek banks rallying sharply. The London Stock Exchange is closed for a bank holiday.
