Stocks gained more than 1 percent on Monday, buoyed by healthcare shares, after a Senate bill advanced which had been stripped of provisions seen as detrimental to health insurance and other companies.

Stocks also got a lift after brokerages upgraded two Dow components.

Legislation to overhaul the U.S. healthcare system passed a crucial test early Monday as backers cleared a procedural hurdle to approving President Barack Obama's top legislative priority.

Following the vote, the Morgan Stanley Health Payor index <.HMO> climbed 3.8 percent while insurer Aetna Inc added 5.9 percent to $34.30.

This is a relief rally, since some of the most onerous provisions in the bill, such as a possible tax on pharmacy benefit mangers, turned out not to have materialized, said Craig Peckham, equity trading strategist at Jefferies & Company in New York.

Also, while the bill passed the Senate, the market knows it'll be an uphill battle to reconcile the Senate and House versions.

The Dow Jones industrial average <.DJI> gained 111.55 points, or 1.08 percent, to 10,439.69. The Standard & Poor's 500 Index <.SPX> rose 13.04 points, or 1.18 percent, to 1,115.42. The Nasdaq Composite Index <.IXIC> jumped 25.47 points, or 1.15 percent, to 2,237.14.

Aluminum company Alcoa Inc gave the biggest boost to the Dow after Morgan Stanley raised the company to buy, expecting it to report increased profitability in its alumina and downstream divisions. The stock advanced 8.9 percent to $15.87.

Barclays upgraded Intel Corp to overweight, lifting the stock 3.3 percent to $20.25.

The S&P consumer discretionary sector <.GSPD> rose 1.2 percent following the last weekend before the Christmas holiday despite a major snow storm in the Eastern United States, which caused some shoppers stay in.

Several acquisition deals were announced on Monday, with Sanofi-Aventis agreeing to buy consumer healthcare company Chattem Inc for about $1.9 billion, lifting the stock 33 percent to $92.85.

In addition, Bucyrus agreed to buy Terex's mining business for $1.3 billion in cash.

TreeHouse Foods said it would buy Sturm Foods from private equity firm HM Capital Partners for $660 million.

Bucyrus shares climbed 9.7 percent to $55.77 while Terex was up 5.1 percent to $20.18 and TreeHouse surged 16 percent to $38.85.

(Editing by Kenneth Barry)

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