U.S. stocks rallied as reassuring economic news overseas, easing fears about Syria, and greater comfort about Federal Reserve policy helped lead blue chips to their best day in nearly two months. The Dow Jones Industrial Average advanced 140.62 points, or 0.9%, to 15063.12, marking the index's biggest one-day gain since July 11.
The S&P 500-stock index rose 16.54 points, or 1%, to 1671.71, the benchmark's best session since Aug 1. The S&P 500 is up 17.2% so far in 2013. The Nasdaq Composite Index gained 46.17 points, or 1.3%, to 3706.18.
The S&P 500 shed 3.1% in August as investors worried about the potential for the Fed to pare back its efforts to support the U.S. economy. The prospect of U.S. military action against Syria has fanned investor fears. But September so far has shaped up to be a better month for stocks, with Monday marking five consecutive sessions of gains.
U.S. stocks rallied from the opening bell Monday with help from strong economic data released overnight by China. The country reported that exports rose 7.2% in August from a year earlier. A weakening outlook for China has been a source of concern among many investors.
The materials sector, seen as closely tied to commodities demand from China, led the S&P 500 Monday, rallying 1.5%. Industrials shares, also seen as linked to the region's economy, were up 1.2%.
"It seems like the Chinese export engine is gearing up a little bit," said Paul Zemsky, chief investment officer overseeing about $25 billion in multiasset strategies at ING U.S. Investment Management. Mr. Zemsky said better news on overseas growth bodes well for stocks in the S&P 500, many of which get a significant chunk of sales from international markets.
Also helping prop up stocks was speculation that the Fed won't be as aggressive in scaling back stimulus measures this month following a weaker-than-expected jobs report last Friday. Fed officials will meet next week to decide on monetary policy. Many in the market are expecting the Fed to announce it will cut back on the $85 billion a month in bond purchases the central bank has been employing to pump money into the financial markets.
With investors now thinking the Fed will take smaller steps to slow its easing than had been feared, Treasury prices edged higher Monday and the yield on the benchmark 10-year note slipped to 2.898%. Before last week's jobs data, the yield on the 10-year briefly pushed above 3% for the first time in more than two years.
Asian markets rallied, highlighted by a 3.4% surge in China's Shanghai Composite to a three-month high after the data. Japan's Nikkei Stock Average gained 2.5% following a report showing that the economy grew faster in the second quarter than initially estimated.
European markets closed lower. The Stoxx Europe 600 fell 0.1% in quiet trading, snapping a three-session winning streak.
Crude-oil futures slid 1.4% to settle at $109.52 a barrel, while gold futures were nearly flat, rising less than 0.1% to settle at $1,386.80 a troy ounce. The dollar gained ground against the yen but edged lower against the euro.