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NEW YORK (CNN/Money) -
Stocks snapped back Monday, rallying soundly after last week's big selloff amid strength in retail and financial.
The Dow Jones industrial average (up 112.17 to 10,252.29, Charts) added 1.1 percent, and the broader Standard & Poor's 500 (up 11.64 to 1,165.69, Charts) index rose around 1 percent.
The Nasdaq composite (up 17.65 to 1,994.43, Charts) gained around 0.9 percent.
An upbeat outlook from Lowe's helped fire up the home-improvement retailers and by extension, the broader retail index. Meanwhile, financials benefited in part from a bullish Barron's article on Citigroup.
U.S. light crude closed little changed after sliding through the morning. But after losing 4 percent last week, analysts say investors may be feeling less nervous about how persistently high oil prices will hit corporate profits going forward.
While the session's advance was seen as positive, it was also a typical "snap-back" rally, after last week's declines, said Art Hogan, chief market analyst at Jefferies & Co.
"I think the market came down over the last few days and is recovering now, and that recovery can probably continue through the end of the week," said Michael Carty, principal at New Millennium Advisors.
He said, however, that concerns about energy prices remain, and they still pose a threat to sustained stock gains. Worries about the pace of Fed tightening have not disappeared either, he added.
Tuesday morning brings earnings from Dow component Home Depot, as well as fellow retailers J.C. Penney and Staples.
But stocks are more likely to be influenced by the reads on April housing starts and building permits, and the April producer price index.
The stock market wants to see "PPI and housing starts numbers that are positive, but not too positive," Hogan added, citing the dilemma facing a market worried about slowing economic growth and rising inflation.
"It's a very tricky balance," he added.
What moved?
Gains were broad-based, with 27 out of 30 Dow issues rising.
Lowe's (up $2.94 to $55.80, Research) rose 5.5 percent and pulled other home improvement retailers higher, including Dow component Home Depot (up $1.08 to $37.37, Research), which added 3 percent.
Lowe's had fallen in before-hours trading after reporting higher quarterly earnings that missed estimates. But the stock gained after the open on the company's more bullish conference call, in which it reaffirmed current quarter and full-year earnings forecasts and said the outlook for the home-improvement market was strong.
The Dow Jones Home Construction (up $27.48 to $833.86, Research) index rose 3.4 percent.
Citigroup (up $0.89 to $46.80, Research) gained after a Barron's article over the weekend said the company's dividend will likely rise over the next year, and its stock price could jump 20 percent.
The Amex Securities Broker/Dealer (Charts) index rose 1.5 percent.
Package delivery firm UPS (up $1.03 to $73.18, Research) has agreed to buy trucker Overnite (up $12.94 to $42.52, Research) for $1.3 billion in cash. The price marked a 46 percent premium over Overnite's Friday closing price, and sent the stock nearly 44 percent higher Monday morning.
On the downside, oil stocks fell along with the commodity, including Dow stock Exxon Mobil (down $0.35 to $53.35, Research), as well as Chevron (down $0.77 to $50.51, Research) and Valero Energy (down $1.10 to $60.66, Research).
The Amex Oil (down $4.20 to $783.12, Research) index lost 0.5 percent.
Market breadth was positive and volume was light. On the New York Stock Exchange, winners beat losers by more than 12 to five on volume of 1.46 billion shares. On the Nasdaq, advancers topped decliners by three to two as 1.43 billion shares changed hands.
The oil effect
U.S. light crude for June delivery fell 6 cents to settle at $48.61 a barrel on the New York Mercantile Exchange, according to early tallies, after having fallen as low as $47.20 a barrel in the morning.
Oil prices lost more than four percent last week.
The drop in oil prices -- paired with a rallying dollar -- sparked a selloff in energy and basic material stocks last week. As those sectors were the leaders of the recent rally, their declines weighed on the broader market. Those sectors slid further Monday, but didn't have the same spillover effect.
Investors seemed to take in stride a surprise drop in the May New York Empire State Manufacturing Index, which revived some fears of an economic slowdown.
The regional read on manufacturing fell to -11, falling below the 0 level that indicates growth. Last month, it stood at a downwardly revised two. Economists surveyed by Briefing.com thought it would rise to 11.
Treasury prices were little changed, leaving the ten-year note yield at about 4.12 percent.
In currency trading, the dollar fell versus the euro and yen.
COMEX gold fell $1.40 to settle at $419.30 an ounce.
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