Stocks rebounded from three days of losses on Monday, led by banks after regulators announced global capital rules that investors viewed as less onerous than previously expected.
Financials, which have been pressured by the euro-zone sovereign debt crisis, were among the biggest gainers, with the S&P financial index <.GSPF> up 1.3 percent.
Shares of Bank of America Corp
On Saturday, global banking regulators in Basel agreed that the biggest banks globally will need to boost their ratios of common equity to risk-weighted assets by up to 2.5 percentage points, less than the 3 percentage points some investors had feared.
It (financials) was a very oversold group and was certainly due for a bounce, said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York. It could have further to go here.
The rules meant the banks could have more funds available to reward shareholders through dividends and buybacks.
Monday's gains followed three days of losses. Although investors bet Greece would take action this week needed to avoid a debt default, the absence of a firm plan limited the market's upside.
The Greek parliament will begin to debate a deeply unpopular austerity program that must be approved in order to get the next bailout payment. A Greek minister warned of catastrophe if the measure was not passed.
We don't see this being the start of a major rally, but this is welcome strength in the market and hopefully a welcome short-term bottom here, said Ghriskey.
The Dow Jones industrial average <.DJI> gained 147.47 points, or 1.24 percent, to 12,082.05. The Standard & Poor's 500 Index <.SPX> rose 14.54 points, or 1.15 percent, to 1,282.99. The Nasdaq Composite Index <.IXIC> added 39.27 points, or 1.48 percent, to 2,692.16.
Also helping to ease tensions, French President Nicolas Sarkozy said his government had an agreement with French banks on rolling over Greek debt into new 30-year bonds.
The fact the benchmark S&P 500 index was holding above its 200-day moving average of around 1,260 was seen as a sign of technical support after two months of heavy selling that dragged the index down about 7 percent.
In economic news, U.S. consumer spending stagnated in May, according to a government report, while a reading on Midwest manufacturing rose slightly. But stock futures barely moved after the data.
Bristol-Myers Squibb Co
(Editing by Kenneth Barry)