U.S. stocks gained ground on Monday as a drop in crude oil eased concern that high energy prices would cut into profits and a 2.5 percent gain in insurer American International Group Inc. propped up the Dow.
The dollar rose across the board and treasuries eased.
In New York, oil slipped 79 cents, while gold rose to settle at $426 an ounce.
Brokerage Merrill Lynch said in a research note that it recommended buying AIG's stock, which rose $1.41 to $57.02 on the New York Stock Exchange.
Merrill said the filing of the insurer's 10-K report with the Securities and Exchange Commission -- expected on Thursday -- could be a catalyst for the shares by reducing uncertainty surrounding the company's accounting, which is under scrutiny by federal and state authorities.
A deal for financial technology company SunGard Data Systems Inc. raised hopes of more deals to come.
SunGard, an S&P 500 constituent, rose nearly 9 percent to $34.36 after a group of private equity investment firms agreed to buy them for about $10.8 billion plus the assumption of debt.
The blue-chip Dow Jones industrial average was up 42.78 points, or 0.41 percent, at 10,485.65 and the broader Standard & Poor's 500 Index was up 2.86 points, or 0.24 percent, at 1,174.28. The tech-heavy Nasdaq Composite Index edged up 1.46 points, or 0.07 percent, at 1,992.52.
"I think the market had entered into a situation where it was oversold, and when that happens all news is good news," Les Seff, chief operating officer and managing director of capital markets at BrokerageAmerica, said. "Coupled with the fact that oil did come off a bit, the good news is even better news."