Stocks were poised for their third straight month of gains on Monday as encouraging economic data and optimistic comments from billionaire investor Warren Buffett boosted investors' appetite.
The gains came after stocks' worst week since November last week. Geopolitical concerns about Libya had pushed oil prices to a 2 1/2-year high, threatening global economic recovery.
Brent crude oil prices, which had jumped toward $120 a barrel last week, eased to $112.
Buffett, chairman of Berkshire Hathaway Inc , spoke in his widely read annual letter to shareholders of the need for major acquisitions, a sign stocks may be cheap. Berkshire's Class B shares rose 2.6 percent to $87.09.
It's not just him, but a lot of companies are looking for stocks to put their money into. We expect M&A activities to dramatically accelerate this year, said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.
The latest acquisition news came from Ventas Inc , which plans to buy Nationwide Health Properties in a $5.8 billion stock deal that strengthens Ventas' position as the biggest U.S. owner of senior housing. NHP shares rose 10.5 percent to $43.07.
But the Nasdaq fell slightly, hurt by Amazon.com Inc , which fell 2.1 percent to $173.46 after UBS downgraded the online retailer, citing increased costs.
The Dow Jones industrial average <.DJI> was up 53.36 points, or 0.44 percent, at 12,183.81. The Standard & Poor's 500 Index <.SPX> was up 2.59 points, or 0.20 percent, at 1,322.47. The Nasdaq Composite Index <.IXIC> was down 10.68 points, or 0.38 percent, at 2,770.37.
The losses suffered last week allowed the market to reduce some of its overbought condition. The S&P 500's relative strength index (RSI), a measure of high to lower closes, was in moderate territory for a fifth day.
Comments from Federal Reserve officials hinting they were ready to support the economy if necessary helped ease concern over the scheduled end of the Fed's $600 billion bond-buying program later this year.
New York Fed Bank President William Dudley said policymakers should be wary about withdrawing liquidity too quickly, while St. Louis Fed Bank President James Bullard would not rule out further use of the Fed's unorthodox tool for stimulus.
Data on Monday showed Midwest business activity rose more than forecast in February.
U.S. incomes posted the largest increase since May 2009 last month. The jump partly reflected a payroll tax cut enacted last year.
(Reporting by Angela Moon, Editing by Kenneth Barry)