U.S. stocks closed sharply higher on encouraging news from the Eurozone and stronger oil prices.
"Some of the tension has cooled off," said Jack Ablin, chief investment officer at BMO Private Bank, referring to late-afternoon reports that Greece's financial minister revealed a plan to end confrontation with its creditors.
"In essence that will help us alleviate some of the Greece, Europe pressure," said Art Hogan, chief market strategist at Wunderlich Securities."
The Dow Jones Industrial Average surged 200 points in the minutes before the close. In a "double-triple move," the index gained 100 in late morning trade after earlier falling more than 120 points on weaker-than-expected ISM figures.
For much of the day stocks struggled for direction amid weaker-than-expected ISM figures and firming oil prices.
"The economic data was not good, but it wasn't negative," said Peter Cardillo, chief market economist at Rockwell Global Capital. "The market has hit a technical brick wall here."
The late-afternoon rally pushed the S&P 500 above the key 2,000 level, which Cardillo and other analysts were watching on this first day of February trade as an indicator of market direction.
U.S. crude closed up at $49.57 a barrel, the highest in nearly a month, after touching an intraday high of $50.56 and slumping to $46.67 in Asian trading.
"The market seems to take its cue off oil prices firming, and Exxon Mobil (earnings), all collectively keeping the overall market relatively stable," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Energy led gains on the S&P 500, closing up 3 percent. Telecommunications followed closely behind, ending the day up 2.43 percent.
Bruce Bittles, chief investment strategist at R.W. Baird, said telecoms have been a "defensive area" with high yields. "That's where investors have been gravitating towards," he said.
Late last week, the Federal Communications Commission auctioned part of the wireless spectrum to major telecom companies led by AT&T for a total of $41 billion. On Monday, the Wall Street Journal also reported that the FCC will likely announce this week that it will allow more cities to build broadband networks for high-speed Internet access.
The ISM manufacturing index hit 53.5 in January 2015, below expectations of 54.5, the weakest reading since January last year.
Stocks closed sharply lower on Friday, with the Dow off more than 250 points and the S&P 500 below the key 2,000 level, for two consecutive monthly declines.