The Institute for Supply Management's manufacturing index showed the sector grew in January at a faster rate than expected, echoing strong manufacturing data from China, Australia and the euro zone.
Exxon shares rose 2.2 percent to $65.81 after the largest U.S. oil company reported natural gas products boosted results at the company's exploration arm. The S&P energy sector index <.GSPE> rose 2 percent.
The ISM number looks good on all fronts, said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio. The market is coming off an oversold condition, so it's responding.
The Dow Jones industrial average <.DJI> gained 91.59 points, or 0.91 percent, to 10,158.92. The Standard & Poor's 500 Index <.SPX> rose 10.83 points, or 1.01 percent, to 1,084.70. The Nasdaq Composite Index <.IXIC> added 11.46 points, or 0.53 percent, to 2,158.81.
Shares of industrial materials companies gained on the strong global manufacturing data, with aluminum company Alcoa Inc up 3 percent to $13.11 and U.S. Steel Corp adding 3.8 percent to $46.11
Reaction to U.S. President Barack Obama's fiscal 2011 budget proposal was muted. The budget projected the deficit soaring to a post-World War Two high of $1.56 trillion, or 10.6 percent of gross domestic product but falling to half that level by the time his term ends in 2012.
Meanwhile, a top European Union official said Greece's fiscal cutback plans were ambitious but achievable, relieving some of the anxiety that drove investors away from risky assets, including stocks, in recent weeks.
(Reporting by Edward Krudy; Editing by Kenneth Barry)