The dollar's decline prompted investors to buy stocks, according to Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
The greenback retreated as the United States and China failed to reach an agreement over currencies at a summit of the Asia Pacific Economic Cooperation forum in Singapore, and was further pressured by better-than-expected U.S. retail sales data.
Boockvar said a move to borrow cheap dollars to invest in higher yielding assets was also driving the market higher.
The Dow Jones industrial average <.DJI> rose 139.89 points, or 1.36 percent, to 10,410.36. The Standard & Poor's 500 Index <.SPX> gained 18.01 points, or 1.65 percent, to 1,111.49. The Nasdaq Composite Index <.IXIC> added 32.53 points, or 1.50 percent, to 2,200.41.
Shares of AK Steel Holding Corp jumped 7.5 percent to $18.70, while Exxon Mobil Corp added 2.5 percent to $74.31 and led the Dow industrials. Both the S&P energy sector <.GSPE> and the S&P materials sector <.GSPM> rose 2.5 percent.
Crude futures jumped 3.7 percent to $79.14 per barrel, while the dollar index <.DXY> fell 0.5 percent and was slightly above a 15-month low set last week.
Freeport-McMoRan Copper & Gold Inc shares jumped 3.6 percent to $84.47, as December gold futures touched a fresh high above $1,134 an ounce.
Shares of Sprint Nextel Corp rose 10.7 percent to $3.43 after an analyst upgraded the No. 3 U.S. mobile service on expectations it is turning the corner on subscriber losses.
Federal Reserve Chairman Ben Bernanke will speak about economic conditions on Monday, and investors are watching for signals on when the Fed will remove stimulus measures from the economy. Bernanke is scheduled to talk at 12:15 p.m. EST.
Considering that last week we had Fed members reiterating that rates will stay lower for longer, I see no reason to think that Bernanke is going to say something otherwise, Boockvar said.
Thomas Hoenig, the Kansas City Fed president, said Monday the U.S. economy still faced significant weaknesses.
(Editing by Jeffrey Benkoe)