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Stocks End Up 2%; S&P Snaps 7-Day Selloff

Stocks finished sharply higher Monday after some euro zone optimism helped boost investor confidence and following robust retail sales over the Thanksgiving weekend.

The Dow Jones Industrial Average soared 291.23 points, or 2.59 percent, to close at 11,523.01, led by Alcoa and Caterpillar .

The S&P 500 jumped 33.88 points, or 2.92 percent, to end at 1,192.55. The Nasdaq surged 85.83 points, or 3.52 percent, to finish at 2,527.34. Both indexes reversed seven days of straight declines.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished near 32.

All 10 S&P sectors closed in positive territory, led by materials and energy.

Trading was still light with just 6.2 billion shares changing hands during the day, significantly below the daily average of 8 billion shares.

“We’ve had a good bounce,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. “[But] with the continuing EU problems…this seems to be a good one-day oversold bounce.”

“The S&P 500 found some trouble around the 1,200 area so we have some logical area of potential resistance,” Detrick added.

European stocks also jumped, led by financials, as officials said Germany and France were exploring radical actionsof securing deeper and more rapid fiscal integration among euro zone countries.

Italy's prime minister faces a testing week as he seeks to shore up the country's strained public finances, with an IMF mission expected in Rome and market pressure building to a point where outside help may be needed to stem a full-scale debt emergency.

An IMF spokesperson denied that the institution was in talkswith Italian authorities for a loan of up to 600 billion euros ($798 billion) after Italian daily newspaper La Stampa reported that the Fund was considering such a plan.

And the OECD said the euro zone was in a mild recession, identifying the debt crisis as the main risk for the global economy.

President Obama said that the European debt crisis is a "huge issue" and the U.S. is willing to provide help.

“We can easily justify a 15 to 20 percent rally in domestic equities over the next few months…We were deeply oversold and there’s plenty of upside left in the market but fears over Europe may hold us back,” said Phil Orlando, chief equity market strategist at Federated Investors.

Meanwhile, U.S. retailers racked up a record $52.4 billion in sales over the Thanksgiving weekend, a 16.4 percent jump from a year ago, as early hours and attractive promotions brought out more shoppers, an industry trade group said on Sunday.

Best Buy and Wal-Mart Stores were both higher.

Amazon.com also rallied after the online retail giant said its Kindle sales surged on "Black Friday."Meanwhile, the firm also benefited from "Cyber Monday," the biggest online shopping day of the year.

Financials were also higher with Morgan Stanley and Citigroup both up sharply.

Oil giant Anadarko Petroleum said its major gas finds offshore Mozambique were actually twice as large as it earlier thought. Meanwhile, Jefferies cut its price target on the firm to $100 from $104.

Meanwhile, Commercial Metals soared almost 20 percent after billionaire investor Carl Icahn offered to purchase the firm at around $1.73 billion, or $15 per share.

Ternium, Latin America's second-largest steelmaker, said it would pay $2.2 billion to buy a stake in Brazilian rival Usiminas from two of its minority shareholders, despite tough conditions for mills in the continent's largest economy.

On the economic front, new home sales edged up 1.3 percent in Octoberto a seasonally adjusted 307,000-unit annual rate, according to the Commerce Department. Still, the gain was below expectations.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC

On Tap This Week:

TUESDAY: S&P Case-Shiller home price index, consumer confidence, FHFA home price index, Fed's Kocherlakota speaks, Fed's Yellen speaks; Earnings from Tiffany
WEDNESDAY: Weekly mortgage applications, Challenger job-cut report, ADP employment report, productivity & costs, Chicago PMI, pending home sales index, oil inventories, Beige Book, farm prices, AT&T/TMobile hearing, USDA's agricultural trade outlook; Earnings from American Eagle, Aeropostale
THURSDAY: Jobless claims, ISM mfg index, construction spending, chain store sales, auto sales; Earnings from Barnes & Noble, Kroger, Lululemon, H&R Block
FRIDAY: Employment situation, Fed's Plosser speaks; Earnings from Big Lots

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