Stocks ended near highs Monday to post their best trading session in May, with the Dow and S&P 500 snapping a six-day losing streak and the Nasdaq posting its best one-day percentage gain this year, as investors snapped up beaten-down stocks.
Facebook plunged almost 11 percent on its second day of trading, falling well below its IPO priceof $38 a share. (Read More: Why Facebook Stock May Keep Declining—'There's No Bottom')
The Dow Jones Industrial Average jumped 135.10 points, or 1.09 percent, to close at 12,504.48, led by Boeing and Caterpillar .
The S&P 500 rallied 20.77 points, or 1.60 percent, to end at 1,315.99. The Nasdaq soared 68.42 points, or 2.46 percent, to finish at 2,847.21.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, plunged near 22 after spiking above 25 last week.
Most key S&P sectors ended higher, led by techs and materials, while utilities edged lower.
Facebook's first day of trading drew the largest volume in market historybut gains were muted last Friday, disappointing investors who had hoped the social networking giant's IPO would would brighten the mood in what has been a gloomy month for equity markets.
The Nasdaq OMX Group said it is altering its IPO trading procedures following glitches in Facebook market debut last week.
Meanwhile, Apple jumped more than 5 percent, struggling to recover losses since losing more than 10 percent from its recent closing high in April. Separately, Apple and Samsung executivesarescheduled to meet in court-directed mediation over a dispute in which the iPhone maker claims the Korean firm has copied some of its products.
JPMorgan CEO Dimon said the firm is suspending its share repurchases to boost capital for Basel III, but intends to maintain its dividend. Guggenheim cut its price target on the company to $50 from $53, while JMP slashed its rating on the firm to "underperform" from "market perform." Meanwhile, Citigroup added the company to its "top picks" list and maintained its "buy" rating.
Among other large financials, JMP Securities also cut its ratings on BofA , Goldman Sachs and Morgan Stanley to "market underperform" from "market perform." In addition, Guggenheim lowered its price target on Wells Fargo to $40 from $43.
European shares rebounded from five-month lows, but ongoing uncertainties surrounding Greece kept a lid on gains. Over the weekend, the Group of Eight world leaders reiterated that they want Greece to remain in the single currency union.
German Chancellor Angela Merkel may come under further pressure at an informal EU summit Wednesday, where France’s new president Francois Hollande may renew his call from the weekend for the establishment of euro zone-backed Eurobonds and seek support from other European leaders for the proposal.
“There’s a short term process to keep watching and that is what happens to the ATM machines in Athens,” warned Art Cashin, director of floor operations at UBS Financial Services. “If people start pulling their money out rapidly in Athens and Spain, it becomes a bank run—it’s completely out of the hands of the leadership—and it becomes a crisis instantly.
Yahoo gained after news that Chinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo for $7.1 billion, in a deal that moves the Chinese e-commerce leader closer to a public listing.
Among earnings, Lowe's tumbled after the home-improvement retailer slashed its fiscal-year earnings outlook, adding that demand has slowed. And Campbell Soup topped earnings expectations but left its full-year guidance unchanged.
Cooper Industries surged after Eaton said it will acquire the electrical equipment maker for $11.8 billion in cash and stock.
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
TUESDAY: Existing home sales, 2-yr note auction, Atlanta Fed's Lockhart speaks, Arkansas/Kentucky Primaries; Earnings from AutoZone, Best Buy, Medtronic, Dell, Take Two
WEDNESDAY: Weekly mortgage apps, FHFA home price index, oil inventories, 5-yr note auction, Minneapolis Fed's Kocherlakota speaks, CME shareholders mtg, Kraft shareholders mtg; Earnings from Hewlett-Packard, Big Lots, Toll Brothers, NetApp, Pandora
THURSDAY: Durable goods orders, jobless claims, 7-yr note auction, BlackRock shareholders mtg, Goldman Sachs shareholders mtg, McDonald's shareholders mtg; Earnings from Costco, Tiffany
FRIDAY: Consumer sentiment, USDA food prices outlook
More From CNBC.com: