A jump in oil prices sent investors rushing to put money into the stock market in the final days of the second quarter.
Energy, industrial and materials stocks pulled the market higher in light trading Monday as investors raced to keep up with the gains in oil.
Crude rose $2.33 to settle at $71.49 a barrel on the New York Mercantile Exchange after China said it would boost oil reserves and Nigerian militants partly shut down an offshore oil platform.
With the quarter's end coming up on Tuesday, some money managers were making last-minute adjustments to their portfolios just ahead of issuing quarterly reports to their clients. A benchmark against which many funds are compared, the Standard & Poor's 500 index, is up 16.2 percent since the start of the April-June quarter.
Analysts cautioned against seeing the upswing as a sign of conviction among investors that it was time to move into the market ahead of an economic recovery. Stocks seesawed in the early going but jumped after oil gained.
After running the S&P 500 index up 37 percent since March on a litany of "less bad" economic data, investors have become more cautious about the pace of the economy's recovery this month and are looking for more concrete signs of growth.
The Dow Jones industrial average rose 90.99, or 1.1 percent, to 8,529.38. The S&P 500 index rose 8.33, or 0.9 percent, to 927.23, while the Nasdaq composite index rose 5.84, or 0.3 percent, to 1,844.06. Stocks ended last week mixed.
There was little economic news Monday but the week, which is abbreviated by the Independence Day holiday on Friday, brings key data that could give investors a better sense of where the economy is headed.
Of particular importance is the monthly employment report due out Thursday. Though considered a lagging indicator of the country's economic health, the unemployment rate is still one of the most closely watched gauges of the economy. The labor market is intricately tied to many facets of the economy including consumer spending.
Investors also will get reports on consumer confidence and manufacturing this week.
The Dow is up 30.3 percent from a 12-year low on March 9, though it has fallen 3.1 percent from a five-month high on June 12. The blue chips are now down only 2.8 percent in 2009.
Harry Rady, chief executive of Rady Asset Management, is concerned that although the market's rally has lost steam in the past three weeks traders are still too optimistic about how quickly the economy can recover.
"I see a bit of complacency creeping into the market," he said. "The market has run up and that has the inverse effect of what it should."
Rady sees trouble in the continuing retreat of a gauge of fear in the stock market, and contends that investors are overlooking danger spots in the economy like heavy debt loads and weakness in the dollar.
The Chicago Board Options Exchange Volatility Index, or VIX, is a measure of stock market volatility that has been easing since early March. The VIX is down 37 percent in 2009 and stands below 26. The historical average is 18-20. It hit a record 89.5 in October at the height of the financial crisis.
Three stocks rose for every two that fell on the New York Stock Exchange, where consolidated volume came to a light 4 billion shares compared with 5.1 billion traded Friday. Volume was heavy Friday because of the annual reconstitution of the Russell 3000 index forced investors to make changes to their portfolios.
Bond prices rose, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.48 percent from 3.53 percent late Friday.
The dollar was mixed against other major currencies. Gold prices fell.
The gains in commodities lifted energy, industrial and materials stocks. Exxon Mobil Corp. rose $1.53, or 2.2 percent, to $70.58, defense contractor General Dynamics Corp. rose $1.54, or 2.8 percent, to $57 and Eastman Chemical Co. rose $1.38, or 3.7 percent, to $38.79.
Shares of Ford Motor Co. rose 17 cents, or 3 percent, to $5.78 after the automaker's top sales analyst said U.S. auto sales might have stopped their month-to-month slide in June and could be down less than 30 percent for the first time since September. Automakers, which are expected to report June sales in the U.S. on Wednesday, have been hit by a 37 percent drop in sales in the first five months of the year.
In other trading, the Russell 2000 index of smaller companies fell 2.61, or 0.5 percent, to 510.61.
Overseas, Britain's FTSE 100 rose 1.3 percent, Germany's DAX index advanced 2.3 percent, and France's CAC-40 rose 2 percent. Japan's Nikkei stock average fell 1 percent.