Some solid earnings and takeover activity boosted the stock market, which is coming off the Dow's and the Standard & Poor's 500 index's biggest weekly drops in nearly five years. The Dow is down about 4.8 percent from its July 19 record close of 14,000.41, having caved under worries about a shakier lending climate.
In a sign that aversion to corporate debt hasn't stanched deal-making, industrial equipment manufacturer Ingersoll-Rand said it's selling its Bobcat earth-moving division and two other units to Korea's Doosan Infracore for $4.9 billion.
Despite rising defaults and delinquencies in mortgage lending, HSBC Holdings PLC, Europe's largest bank by market value, posted a 25 percent rise in first-half earnings. Also, General Motors Corp.'s GMAC Financial Services said second-quarter profit declined but that it expects its residential lending business to improve in the second half of the year.
The market initially wavered between positive and negative territory Monday, but then pushed higher in afternoon trading as investors re-entered the market to scoop up bargains.
"At this point, I'd call it a relief rally," said Henry Herrmann, chief executive officer at investment management firm Waddell & Reed. He noted that stock investors will stay focused on the credit markets for a while, especially as they receive more word on hedge funds' recent performance.
The Dow rose 92.84, or 0.70 percent, to 13,358.31, after falling by as much as 46 points during the session. On Thursday and Friday, the Dow plunged a total of 585 points.
Broader stock indicators also rose. The Standard & Poor's 500 index added 14.96, or 1.03 percent, to 1,473.91, and the Nasdaq composite index advanced 21.04, or 0.82 percent, to 2,583.28.
Bonds fell modestly as stocks gained, driving the 10-year Treasury note's yield up to 4.81 percent from 4.77 percent late Friday. A week ago, the 10-year note's yield was at 4.95 percent, but has since sunk as investors sought safe assets during the stock market's plunge.
Market watchers say the market's credit-related jitters are far from assuaged, and that investors should expect high volatility to continue.
"The mythical investor vacillates between fear and greed," said Kim Caughey, equity research analyst at Fort Pitt Capital Group. She said she regards last week's plunge as an opportunity to buy, albeit selectively.
In an indication that there is still demand for cheap, risky assets, Chicago-based hedge fund Citadel Investment Group LLC's said it is buying the credit portfolio of Sowood Capital. Sowood is a Boston-based hedge fund that has reportedly suffered sizable bond-related losses.
Ingersoll Rand rose $3.63, or 7.5 percent, to $51.77 on its decision to sell three of its units.
HSBC rose 1.4 percent in London trading after releasing its earnings.
General Motors Corp. rose $1.51, or 4.9 percent, to $32.61, after GMAC reported its financial results.
In other corporate news, RadioShack Corp. said second-quarter sales fell 15 percent compared with a year ago. The electronics retailer dropped $3.25, or 11.3 percent, to $25.55, although it swung to a second-quarter profit from a loss a year ago.
Verizon Communications Inc. posted a rise in second-quarter profit that met expectations, and said Verizon Wireless, its joint venture with Vodafone Group PLC, will buy Rural Cellular Corp. in a deal worth about $757 million.
Verizon, one of the 30 Dow components, fell 49 cents to $41.51. Rural Cellular jumped $10.95, or 34 percent, to $42.76.
High energy prices, which contribute to inflation, remain a concern for investors. Oil futures fell 19 cents to $76.83 a barrel on the New York Mercantile Exchange. On Friday, they finished a penny away from the record close of $77.03, reached July 14, 2006.
The dollar was mixed against other major currencies. Gold prices rose.
The Russell 2000 index of smaller companies rose 6.40, or 0.82 percent, to 784.23 — back in positive territory for the year after turning negative Friday.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 2.03 billion shares compared with a heavy 2.27 billion shares Friday.
In Asian trading, Japan's Nikkei stock average rose 0.03 percent, Hong Kong's Hang Seng index rose 0.8 percent, and China's Shanghai Composite Index jumped 2.2 percent to a new record.
In European trading, Britain's FTSE 100 fell 0.15 percent, Germany's DAX index rose 0.06 percent, and France's CAC-40 rose 0.04 percent.