U.S. stocks climbed more than 1 percent on Monday, rebounding from a sharp decline last week, helped by deal activity in healthcare and a bounce in energy shares.
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Also boosting investors' risk appetite, Chinese stocks surged to seven-year highs, helped by hopes for more infrastructure spending and monetary policy easing.
The Dow registered its biggest daily percentage gain since Feb. 3 and all 10 primary S&P 500 sectors rose on the day, led by energy, which jumped 2.1 percent despite a slight decline in Brent and U.S. oil prices.
"(The rally) sort of seems to be global growth based right now: the Chinese economy is falling but they're going to stimulate," said Uri Landesman, president of Platinum Partners in New York.
M&A activity has helped boost equities, especially shares of smaller companies, Landesman said. "That's been a theme of this market on and off for a very long time."
On the deal front, OptumRx Corp, a unit of UnitedHealth Group, agreed to buy pharmacy benefit manager Catamaran Corp in a deal worth $12.78 billion. Shares of UnitedHealth, a Dow component, rose 2.5 percent to $121 while U.S. shares of Catamaran added 23.8 percent to $59.83.
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The Dow Jones industrial average rose 263.65 points, or 1.49 percent, to 17,976.31, the S&P 500 gained 25.22 points, or 1.22 percent, to 2,086.24 and the Nasdaq Composite added 56.22 points, or 1.15 percent, to 4,947.44.
Major indexes each lost more than 2 percent last week.
Uncertainty about Friday's jobs report and upcoming earnings, which start in earnest in mid-April, could create volatility this week, with the stock market closed for Good Friday.
The Nasdaq Biotech index rose 1.1 percent but remains roughly 5 percent below a record high from earlier this month. The group has recently been under pressure, with the index down 5.2 percent last week in its biggest weekly decline in a year.
Teva Pharmaceutical said it would buy Auspex Pharmaceuticals Inc for $3.5 billion. Ireland's Horizon Pharma Plc said it would acquire Hyperion Therapeutics Inc in an all-cash deal worth about $1.1 billion.
U.S. shares of Teva were up 0.9 percent at $62.52 while Auspex added 41.5 percent to $100.36. Horizon rose 18.2 percent to $25.78 on the Nasdaq while Hyperion rose 7.6 percent to $45.98.
Separately, Fujifilm Holdings Corp agreed to acquire U.S. biotechnology firm Cellular Dynamics International Inc for $307 million. Cellular shares more than doubled in heavy trading.
About 5.8 billion shares changed hands on U.S. exchanges, below the 6.7 billion daily average this month, according to BATS Global Markets.
Advancing issues outnumbered declining ones on the NYSE by 2,271 to 806, for a 2.82-to-1 ratio; on the Nasdaq, 1,856 issues rose and 881 fell, for a 2.11-to-1 ratio.
The S&P 500 posted 26 new 52-week highs and 1 new low; the Nasdaq Composite recorded 110 new highs and 44 new lows. (Editing by Chizu Nomiyama and Nick Zieminski)