U.S. stocks surged in the final minutes of trading, rebounding after the biggest two-day rout in three months, as financial and technology companies paced a climb from equities' lowest levels since October.
Apple Inc. rose 1.2 percent and JPMorgan Chase & Co. advanced 1.8 percent. Avago Technologies Ltd. added 4 percent to lead chip-makers. Tenet Healthcare Corp. gained 12 percent after encouraging government data on sign-ups for Obamacare coverage for next year. Raw-materials companies increased amid signs that China may add to its stimulus efforts. Walt Disney Co. fell for a third day, losing 1.1 percent.
The Standard & Poor's 500 Index gained 0.78 percent to 2,021.15, as the gauge rebounded from a 3.3 percent two-day drop. The Dow Jones industrial average added 123.07 points, or 0.72 percent, to 17,251.62. The Nasdaq composite index increased 0.93 percent to 4,968.92. About 6.8 billion shares changed hands on U.S. exchanges Monday, 6.8 percent below the three-month average.
"After the declines of last week, there's a little more value to be created," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Corp., which oversees $946 billion. "There's also chatter about stimulus out of China. It's incremental, but it's a signal of their determination to prevent further slowdown. Seasonally speaking, stocks tend to get a bit better into year end."
Investors have wavered between optimism on the U.S. economy and concern that a slowdown in China will spread. Worries about weakness in the world's second-largest economy were stoked in August by a surprise currency devaluation, triggering the S&P 500's first correction in four years. The gauge rebounded as much as 13 percent from a summer low through early November before giving up 4.9 percent through last week.
The equity benchmark has fallen 2.9 percent in December, bucking the historical seasonal trend of gains, and is on track for its biggest annual drop since the 2008 financial crisis. That puts even more pressure on the so-called Santa Claus rally to save the year. Historically, the final two weeks of December deliver a gain of 1.7 percent.
Investors initially reacted positively to the message from Fed policy makers, who signaled last week a belief that the U.S. economy is performing well while emphasizing no rush to further boost interest rates. Turbulence in commodities and the implications for global growth quickly drew renewed attention, as oil collapsed below levels last seen during the 2008 global financial crisis on signs the market's oversupply will worsen.
Federal Reserve Bank of Atlanta president Dennis Lockhart said Monday the central bank's commitment to a "gradual" tightening suggests rates could be raised at every other meeting of the policy-setting Federal Open Market Committee, though the actual pace will depend on economic data. Reports this week on home sales, durable-goods orders, and personal income will provide further cues.