Stocks rallied more than 1% in early trading Monday on optimism that President Obama and Congress would reach a deal to resolve a looming fiscal crisis at the end of the year.
The Dow Jones industrial average gained 142 points, or 1.1%, to 12,730 shortly after the opening bell.
The broader Standard & Poor's 500 index was up 20 points, or 1.4%, to 1,379.
The tech-heavy Nasdaq, which entered into correction territory last week, gained 44 points, or 1.6%, to 2,898.
After a week of declines last week, major U.S. indexes finished up 0.4% or more Friday after Obama and congressional leaders met at the White House about the so-called "fiscal cliff."
The automatic spending cuts and tax increases due at year's end could push the fragile U.S. economy back into recession, economists have warned.