Volume was also light, an indication that many investors were staying away.

"We are still working off what is technically an oversold market, and a good news story can cause a decent rally," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. "That's what happened last week and it could happen this week. As far as sustainability, though, we'll have to see."

The Dow closed up 169.74, or 1.7 percent, at 10,109.66, according to preliminary calculations.

Broader indicators fared even better. The tech-focused Nasdaq composite index rose 51.69, or 3.2 percent, to 1,652.54. The Standard & Poor's 500 index was up 19.57, or 1.9 percent, at 1,074.56.

Wall Street got a lift from a Manpower survey showing that businesses expect to hire more employees in the third quarter of this year, particularly in manufacturing. Manpower is the nation's largest staffing company.

Applied Materials rose $1.88, or 7.9 percent, to $25.88 on a Merrill Lynch upgrade the day before the semiconductor services and products company reports earnings. Goldman Sachs also raised its estimates for the company.

The buying spread across the tech sector. Microsoft climbed $2.64 to $52.69, while Intel advanced $1.51 to $28.52.

Financial stocks also fared well. American Express advanced $1.50 to $43, while Citigroup rose 94 cents at $44.24 despite a Wall Street Journal article that questioned its finances.

Among retailers, Lands' End surged $10.71, or 21 percent, to $61.73 on word that Sears, Roebuck was buying the catalog-retailer for about $1.9 billion. Sears rose 19 cents to $52.

Wall Street was also waiting for a Commerce Department report due tomorrow on April retail sales. Stores released their own figures last week, and many were disappointing.