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Stocks End at 3-Month Highs, Led by Materials

Stocks lost steam in the final minutes of trading but still finished modestly higher Monday, hitting fresh three-month highs, amid ongoing expectations that the ECB would step in to address the region's debt crisis.

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S&P 500
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The Dow Jones Industrial Average rose 21.34 points, or 0.16 percent, to close at 13,117.51, led by Bank of America and H-P . With the Dow ending in positive territory, the blue-chip index managed to avoid its 10th consecutive Monday loss.

The S&P 500 climbed 3.24 points, or 0.23 percent, to end at 1,394.23. The Nasdaq gained 22.01 points, or 0.74 percent, to finish at 2,989.91.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished near 16.

Among the key S&P sectors, techs and materials led the gainers, while utilities ended slightly lower.

“This has been a proverbial ‘climbing a wall of worry,’” said Russ Koesterich, BlackRock iShares Group of the stock market. “If we can remove some of the tail risks, Europe and fiscal cliff, the market can probably continue to grind higher into the third and fourth quarter.”

U.S. stocks snapped a four-day losing streakon Friday after non-farm payrolls rose by a seasonally adjusted 163,000 in July. Meanwhile, a gain in the unemployment rate to 8.3 percent from 8.2 percent was viewed by market participants as keeping the door open for further economic stimulus measures from the Federal Reserve. (Read More: Despite Jobs Report, Street Unsure of Fed’s Next Move)

Meanwhile, Fed Chairman Ben Bernanke said although broad measurements of the economy point to recovery, many people and businesses are still facing tough times. He did not discuss the outlook for monetary policy or refer to the recent jobs report.

European shares closed near four-month highs, boosted renewed optimism that the ECB will commence purchasing Italian and Spanish debt next month.

“You have to give Mario Draghi a great compliment—he pulled a David Copperfield,” said Art Cashin, director of floor operations at UBS Financial services. “While everyone was looking at the broken arm Spain had, he talked about how strong their legs were—he took everybody’s focus from the 10-year and put it on the 2-year. And by doing that, he bought them a lot of time.”

Apple said the new version of its iPhone and iPad software will not include a pre-packaged app for Google's YouTube. Both stocks were trading higher.

Knight Capital Group announced a $400 million dealwith a group of investors that will help the company in business. The deal is expected to close later this morning. Knight Capital shares plunged after being halted earlier this morning.

Best Buy rallied sharply to lead the S&P 500 gainers after founder Richard Schulze, who resigned from the company's board earlier this month, offered to buy the consumer electronics retailer for between $24 and $26 a share. Schulze is currently Best Buy’s largest shareholder, holding 20.1 percent of the company's shares. Meanwhile, S&P lowered its credit rating on the company to BB+ from BBB-.

Las Vegas Sands edged lower after the resort company became the target of a federal investigation amid possible violations of U.S. money-laundering laws, according to reports.

Among earnings, Cognizant Technology jumped after the information technology services provider boosted its full-year adjusted profit forecast.

Tyson Foods fell after the meat processor posted weaker-than-expected quarterly results and slashed its full-year outlook due to weak demand.

Chesapeake Energy is scheduled to post earnings after the closing bell.

So far, more than 400 S&P 500 firms have reported quarterly results. Of the companies that have posted, 67 percent of earnings reports have come in above estimates, while 23 percent have missed. Meanwhile, only 41 percent of companies have topped revenue expectations, while 59 percent have disappointed, according to data from Thomson Reuters.

Kraft gained after the Jefferies raised its rating on the Dow component to "buy" from "hold" and boosted its price target to $48 from $41.

Private equity firm Advent International agreed to purchase a majority stakein AOT Bedding Super Holdings, boosting shares other mattress including Tempur-Pedic , Sealy and Select Comfort .

—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

TUESDAY: 3-yr note auction, Bernanke speaks, consumer credit; Earnings from Cablevision, Sirius XM, Disney
WEDNESDAY: Weekly mortgage apps, productivity & costs, oil inventories, 10-yr note auction, AmEx investor mtg, Kodak patent auction, McDonald's same-store sales; Earnings from Computer Sciences, Dean Foods, Macy's, Ralph Lauren, Rio Tinto, Soda Stream, NewsCorp
THURSDAY: International trade, jobless claims, wholesale trade, 30-yr bond auction, Manchester United pricing; Earnings from Advanced Auto Parts, Kohl's, Nordstrom
FRIDAY: Import/export prices, USDA crop production report, Manchester United IPO; Earnings from JCPenney

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