Stocks staged their biggest two-day rally in almost a year as oil prices closed below $60 a barrel and government reports showed gains in consumer incomes and spending.
The advance pared the October loss for the Standard & Poor's 500-stock index to 1.8 percent, still the steepest since April. Better-than-forecast monthly sales from Wal-Mart Stores aided yesterday's climb.
"The market is certainly taking its cue from oil prices," said David Rolfe, who manages $450 million as chief investment officer of Wedgewood Partners in St. Louis. "The economic news has been, on balance, better than expected. We got to a point where we endured a short-term sell-off, the short-term sentiment got to an extreme, and we were ripe for a rebound."
The S&P 500 rose 8.60, or 0.7 percent, to 1207.01. The Dow Jones industrial average gained 37.30, or 0.4 percent, to 10,440.07. The Nasdaq composite index surged 30.42, or 1.5 percent, to 2120.30.
The S&P 500's 2.4 percent rise the last two days is the biggest since November 2004.
Fed policymakers are expected today to increase the Fed's benchmark lending rate by a quarter percentage point, to 4 percent.
Wal-Mart, the world's largest retailer, rallied $1.81, or 4 percent, to $47.31, for the best performance in the Dow average. The company said October same-store sales rose 4.3 percent.
Home Depot, the No. 1 U.S. home improvement chain, gained 52 cents, to $41.04.
Chiron, a U.S. vaccine maker recovering from a manufacturing shutdown, rose 74 cents, to $44.14. Novartis will acquire the 57.8 percent of Chiron that it doesn't own after increasing a cash offer for the stake to $5.1 billion.
Caterpillar gained $1.52, or 3 percent, to $52.59, for the second-best performance in the Dow average.
Apple Computer increased $3.12, to a record $57.59. The maker of the iPod music player has sold more than 1 million videos that run on the devices since adding the programs less than three weeks ago.
Kellogg, the No. 1 U.S. cereal maker, sank $2.29, or 4.9 percent, to $44.17, for its biggest drop in three years. The company forecast full-year earnings below analysts' estimates, citing higher energy costs.
New York Stock Exchange composite index rose 63.57, to 7433.12.
American Stock Exchange index rose 14.04, to 1656.62.
Russell 2000 index of smaller-company stocks rose 11.28, to 646.61.
NYSE: 2.58 billion shares, up from 2.4 billion on Friday. Advancers outnumbered decliners 3 to 1.
Nasdaq: 1.9 billion shares, up from 1.88 billion. Advancers outnumbered decliners 5 to 2.
Crude oil for December delivery: $59.76, down $1.46.
Gold for current delivery: $465.10 a troy ounce, down from $473.00 on Friday.