NEW YORK (CNNMoney.com) -- Stocks rallied Monday, bouncing back after a big selloff last week as investors welcomed news that European leaders agreed to provide Greece with $146 billion in aid over the next three years.
A number of better-than-expected economic reports and some positive monthly sales numbers from the nation's automakers added to the gains.
The Dow Jones industrial average (INDU) rallied 143 points, or 1.3%. The S&P 500 index (SPX) gained 15 points or 1.3%, surpassing 1,200, a key psychological level. The Nasdaq composite (COMP) rose 37 points or 1.5%.
Investors welcomed reports that Greece will receive a substantial bailout from the European Union (EU) and the International Monetary Fund (IMF), as it set to rest worries that the country's ballooning deficit would drag on the euro and exacerbate problems for other debt-plagued nations. Portugal, Italy, Ireland, Greece and Spain - the so-called PIIGS, have all struggled to pay back debt.
"We're seeing a reflex rally after last week's selling," said Jamie Cox, managing partner at Harris Financial Group.
"The bailout happened and it's reassured us," he said. "You put Greece into the background, that means there is a template for all other EU bailouts."
The Greek bailout, along with better-than-expected reports on manufacturing and construction spending in the U.S., overshadowed reports that China is boosting its bank reserves to counteract inflationary pressure. Concerns about China limiting its lending dragged on markets earlier this year.
Investors may have also taken some comfort from comments from influential investor Warren Buffett over the weekend. Buffett said he doesn't think Goldman Sachs did anything wrong in the sale of subprime-related securities at the center of an SEC fraud charge and potential criminal probe from the Justice Department. Buffett's Berkshire Hathaway has a big investment in Goldman Sachs' preferred stock.
Stocks tumbled Friday, posting a weekly decline for the first time in nine weeks, after reports that Goldman Sachs is facing a criminal probe sparked analyst downgrades and a selloff in the financial sector.
However, gains were broad-based, with 29 of 30 Dow stocks advancing, led by Boeing (BA, Fortune 500), United Technologies (UTX, Fortune 500), Chevron (CVX, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), IBM (IBM, Fortune 500), 3M (MMM, Fortune 500) and Caterpillar (CAT, Fortune 500).
Auto sales: Auto and truck sales were being released throughout the session. Ford Motor (F, Fortune 500) posted a 25% year-over-year sales gain in April, the fifth straight month of 20% or more improvement. General Motors (GM) said sales rose 6% from a year ago and fell 2% from last month.
Greece: Worries that Greece would default on its debt have dragged on the stock market for weeks, particularly with a May 19 deadline looming for the country to pay back over $11 billion.
But over the weekend, the EU and the IMF agreed to provide $146 billion in aid over three years, with up to $40 billion available in the first year. The loans were granted after Greece announced it was taking on new "austerity" measures to cut expenses and bring down its budget. On Monday, influential Germany voted to provide $40 billion over three years, saying that letting the country go bankrupt would destabilize the euro.
Airlines: UAL (UAUA, Fortune 500)'s United Airlines said it will buy Continental (CAL, Fortune 500) in a $3.2 billion stock deal that will create the world's largest airline, overtaking current leader Delta Air Lines (DAL, Fortune 500).
The combined company will use United's name and Continental's logo and is expected to have annual revenues of $29 billion.
Economy: The Institute for Supply Management's April manufacturing index rose to 60.4 from 59.6 in March. Forecasts had called for a rise to 60, according to a consensus of economists surveyed by Briefing.com.
March construction spending rose 0.2%, the government reported. Spending fell 2.1% in April and was expected to fall 0.3%.
Personal income for March rose 0.3% after rising 0.1% in February, according to a Commerce Department report released before the start of trading. Economists thought income would rise 0.3%.
Personal spending rose 0.6% in March, in line with forecasts, after rising 0.5% in the previous month.
World markets: In overseas trading, European markets rose, with France's CAC 40 up 0.3% and Germany's DAX up 0.5%. London's FTSE was closed.
Asian markets were mixed, with Hong Kong's Hang Seng index down 1.4% and Japan's Nikkei up 1.2%.
The dollar and commodities: The dollar fell versus the euro and gained against the yen.
U.S. light crude oil for June delivery rose 4 cents to settle at $86.19 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery rose $2 to $1,182.70 per ounce.
Bonds: Treasury prices slipped, raising the yield on the 10-year note to 3.70% from 3.66% Friday. Treasury prices and yields move in opposite directions.
Market breadth was positive. On the New York Stock Exchange, winners topped losers by over three to one on volume of 1.18 billion shares. On the Nasdaq, advancers topped decliners by over two to one on volume of 2.34 billion shares.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.11%||3.96%|
|15 yr fixed||3.45%||3.30%|
|30 yr refi||4.08%||3.94%|
|15 yr refi||3.42%||3.27%|
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