NEW YORK (CNN/Money) - U.S. stocks rallied to a higher close Monday as some positive earnings reports tapped investor confidence and pulled corporate growth and economic concerns back to the forefront.

The Dow Jones industrial average (up 147.69 to 8351.10, Charts) gained 1.8 percent, while the Nasdaq composite (up 26.10 to 1384.95, Charts) rose 1.9 percent and the S&P 500 index (up 16.93 to 885.23, Charts) jumped 2 percent.

"I think there's a little bit of optimism here today -- you can take one eye off Iraq and start to focus more on the economy and earnings," said James Park, senior trader at Brean Murray & Co.

With the war in Iraq de facto over, investors increasingly shifted their focus to matters at home, top of which was the state of the U.S. economy and corporate bottom lines. This week marks the first of the two biggest weeks for posting first-quarter results -- and the first earnings news that came Monday appeared to be encouraging.

Some financial companies, including Citigroup, FleetBoston and Bank of America led the rally on earnings, having reported positive news ahead of the opening bell Monday.

Heading into Tuesday, investors will have more earnings reports to consider -- including a mixed batch posted after the closing bell Monday.

Computer maker IBM (IBM: up $1.32 to $80.07, Research, Estimates) said it earned 79 cents a share in the first quarter, up from 73 cents a year earlier, but a penny below Wall Street forecasts. The company also said its sales came in at levels higher than expected by Wall Street and that it's comfortable with analysts' average estimate for its full-year earnings and revenue. Shares of IBM rose 1.6 percent in post-market trading Monday.

Novellus (NVLS: up $0.70 to $27.35, Research, Estimates), the nation's third-largest maker of microchip production tools, said its first-quarter profit rose to 8 cents a share from 3 cents in the same period last year, beating analysts' average estimate by a penny. But, the company guided lower for the second quarter, sending its shares more than 4 percent lower in after hours trading.

Chip technology company Rambus (RMBS: up $0.32 to $15.76, Research, Estimates) posted earnings of 5 cents a share, in line with Wall Street estimates but slightly below the 7 cents it earned in the year-earlier period.

Heavyweights including Dow components Intel (INTC: up $0.40 to $17.16, Research, Estimates), Johnson & Johnson (JNJ: up $0.40 to $57.78, Research, Estimates) and Microsoft (MSFT: up $0.55 to $24.75, Research, Estimates), along with Texas Instruments (TXN: up $0.71 to $16.94, Research, Estimates), Kraft (KFT: up $0.69 to $29.06, Research, Estimates) and Motorola (MOT: down $0.02 to $7.98, Research, Estimates), are among the companies set to report corporate results Tuesday.

Some economic news also is on tap for Tuesday. Investors will get the latest reading on industrial production for March, expected to slip 0.2 percent from a gain of 0.1 percent in February, according to a survey by Briefing.com.

Economists polled by Briefing.com expect capacity utilization changed little in March to 75.3 percent from 75.6 percent in February.

Both reports are scheduled for 9:15 a.m. ET Tuesday.

While several companies reported better-than-expected quarterly profit reports Monday, some issues, especially in the financial sector, stood out.

Citigroup (C: up $1.08 to $38.43, Research, Estimates), the nation's largest financial conglomerate, reported first-quarter results that were ahead of expectations and also showed improvement from a year earlier. Its stock gained about 2.9 percent.

FleetBoston (FBF: up $0.52 to $25.61, Research, Estimates), the seventh-largest U.S. bank, saw its profit continue to shrink in the first quarter as it struggled to refocus on the consumer part of its business. Still, the results matched expectations and investors appeared to like what they saw, lifting the stock about 2.1 percent.

Rounding out the trio of big financial firms reporting on their bottom lines, shares of Bank of America (BAC: up $0.66 to $72.00, Research, Estimates) also edged higher by about 1 percent after the bank said its own consumer business helped first-quarter earnings grow from a year earlier. Financial stocks on average rose about 2.1 percent.

For a roundup of the latest earnings news, click here.

Meanwhile, Internet companies Amazon (AMZN: down $0.70 to $25.05, Research, Estimates), Yahoo! (YHOO: down $0.08 to $24.35, Research, Estimates) and eBay (EBAY: down $0.55 to $87.74, Research, Estimates) weighed on techs after an article in Saturday's Barron's addressing the recent run-up in the stocks said the companies' valuations may be too high.

There was little news Monday to give investors a sense of where the economy is headed, except for a report showing stocks of unsold goods piled up at a higher rate than had been expected in February.

Market breadth was positive but volume was light, with almost three stocks rising for every one that fell on the New York Stock Exchange, on volume of 1.1 billion shares. On the Nasdaq, two stocks advanced for every one that retreated. Some 1.1 billion shares changed hands there.

U.S. Treasury bonds softened. The bellwether 10-year note lost 12/32 of a point in price, its yield rising to 4.02 percent. The dollar moved little against major currencies.

The price of oil slipped, with light crude for June delivery falling 5 cents to $27.06 a barrel in New York. Gold for June delivery also fell, losing $3.60 an ounce to $324.90.

Overseas, European markets ended mostly higher and Asian stocks finished their trading session mostly lower.