U.S. tocks moved slightly higher in a thinly traded session Monday that lacked few external catalysts just days before the next quarterly earnings season begins in earnest.
The increases followed positive remarks about the U.S. labor market from Federal Reserve Chairman Ben Bernanke and positive economic data from Germany that offset a soft reading on the domestic housing market.
The Dow Jones Industrial Average rose 136 points, or 1 percent, to 13216. The Dow snapped a three-session streak of losses Friday, gaining 35 points, but capped Friday with its biggest weekly loss so far this year.
The Standard & Poor's 500-stock index added 14 points, or 1 percent, to 1411 and the Nasdaq Composite gained 32 points, or 1.1 percent, to 3100.
Bernanke, in a speech to be made to the National Association for Business Economics, said U.S. job market conditions remain weak despite three months of strong hiring. He warned that recent improvements in employment data seem to be out of sync with the overall pace of economic growth.
The central banker pointed to a wide range of indicators suggesting the job market has been improving but cautioned that conditions remain far from normal.
Investors continued to expect that the Fed will bolster the economic recovery with another round of quantitative easing after Friday's weak payroll report underlined the economy's lack of progress in certain areas.
After Friday's report, everyone understands that the Fed has its back to the wall, said Joseph Greco, managing director of Meridian Equity Partners in New York.
The jobs report reminded the Fed that certain forces are not waiting on press releases, so I expect a statement with more aggressive language this week.
The dollar rose 0.1 percent against a basket of other major currencies as the Fed looked set to inject more cash into the economy. But with bets against the greenback piling up, traders were wary about pushing it lower.
The dollar and equities have traded in inverse correlation as investors leave the perceived safety of the currency to put money into equities.
The dollar was also affected after the International Monetary Fund's member countries failed to defuse currency tensions over the weekend.
Three Dow components -- Intel Corp. (Nasdaq: INTC), J.P. Morgan Chase & Co. (NYSE: JPM) and General Electric Co. (NYSE: GE) -- are scheduled to release quarterly results this week. Investors will look at revenue outlooks for insight into how corporations are faring. Bellwethers Google Inc. (Nasdaq: GOOG) and CSX Corp. (NYSE: CSX) are also on tap.
All 10 sectors reflected in the S&P 500 were up Monday, led by health care and financial stocks.
Shortly after Monday's open, data on the U.S. housing market was weaker than expected, but failed dampen the early stock gains. The number of U.S. home buyers who signed contracts to purchase previously owned homes fell slightly in February, while economists expected a modest gain.