U.S. stocks climbed on Monday, rallying in the first session of the new year, after data showed the manufacturing sector expanded for the fifth straight month and a brokerage upgrade of Intel helped lift semiconductor stocks.

The Institute for Supply Management said its index of national factory activity rose to 55.9 in December, its highest level since April 2006 and above forecasts for a reading of 54.3. A reading above 50 indicates expansion.

What people are really concerned with right now is the tightening of liquidity, said Doug Roberts, chief investment strategist at Channel Capital Research.com in Shrewsbury, New Jersey.

For the most part, what (the data) means is the economy right now is repairing, but doesn't seem to be repairing enough to change the Fed's position.

The Dow Jones industrial average <.DJI> jumped 159.91 points, or 1.53 percent, to 10,587.96. The Standard & Poor's 500 Index <.SPX> rose 17.80 points, or 1.60 percent, to 1,132.90. The Nasdaq Composite Index <.IXIC> gained 40.87 points, or 1.80 percent, to 2,310.02.

On Thursday, which was New Year's Eve, the major U.S. stock indexes wrapped up 2009 with double-digit percentage gains: The Dow average rose 18.8 percent for the year, while the S&P 500 gained 23.5 percent and the Nasdaq soared 43.9 percent. U.S. financial markets were closed on Friday for New Year's Day.

In Monday's session, energy stocks gained as U.S. crude oil futures advanced 2 percent, or $1.59, to $80,95 per barrel on concerns over a supply dispute between Russia and Belarus, as well as in reaction to exceptionally cold weather in the United States and a weaker dollar. Earlier in the session, oil futures rose as high as $81.68, the highest level in more than two months.

The greenback fell 0.5 percent against a basket of six other major currencies <.DXY>.

Further boosting the shares of oil-related companies was an upgrade of the U.S. refining sector by Deutsche Bank, which raised its rating on several refiners, including Valero Energy Corp and Sunoco Inc .

Valero Energy jumped 4.8 percent to $17.56 and Sunoco advanced 4.7 percent to $27.33. The PHLX Oil Service index <.OSX> climbed 3.3 percent.

The Philadelphia semiconductor index <.SOXX> jumped 2.1 percent after Robert W. Baird upgraded Intel Corp to outperform on expectations for a rebound in corporate PC spending. Shares of Intel, a Dow component and one of the Nasdaq's bellwether stocks, climbed 2.8 percent to $20.97 in Nasdaq trading.

Morgan Stanley advanced 4.4 percent to $30.90 after Credit Suisse upgraded the company to outperform.

Government data on Monday showed U.S. construction spending fell for a seventh straight month in November. Construction spending slipped 0.6 percent, weighed down by a decline in private home building, and worse than the expected estimate of a 0.4 percent decline in November.

The Dow Jones U.S. Home Construction index <.DJUSHB> gained 0.4 percent.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)