The S&P healthcare sector jumped 4.67%, in part due to gains in Johnson & Johnson and Abbot Laboratories. JNJ surged 8.00% on the U.S. government's plans to help fund the creation of enough manufacturing capacity for its coronavirus vaccine, currently under development.
Abbott Laboratories climbed 6.41% after winning U.S. approval for a diagnostic test for COVID-19.
Along with healthcare, the technology sector also rose more than 4% on the day, as Microsoft shares jumped more than 7%, the biggest boost to the broad S&P 500. A record $2.2 trillion in aid and policy easing from the Federal Reserve helped equities recover some of their losses last week, with the S&P 500 posting its biggest weekly percentage gain in over a decade and the Dow Jones its best since 1938, even after each dropped more than 3% to end the trading week on Friday.
Each of Wall Street's three major indexes remain down more than 20% from the February highs, but investors are now trying to assess the economic damage and identify which companies will be on solid footing when the economy begins to accelerate.
"You are looking for a way to re-enter the market on stocks that are going to give you an opportunity to participate," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York.
"You look at some of those and say there is an opportunity for me to buy good companies with strong balance sheets that on the other side of this should produce."
The Dow Jones Industrial Average rose 690.7 points, or 3.19%, to 22,327.48, the S&P 500 gained 85.18 points, or 3.35%, to 2,626.65 and the Nasdaq Composite added 271.77 points, or 3.62%, to 7,774.15.
President Donald Trump followed last week's massive fiscal stimulus package by extending his stay-at-home guidelines, leaving investors to await more signs on the next stages of a deepening economic crisis.
That is convincing few that the worst of the most dramatic sell-off in a decade is over, and Wall Street's fear gauge, which predicts future volatility, is still running as high as it has been since the 2008 financial crisis.
However, the prospect of more government stimulus has given investors something to hold on to as they wait for signs of economic relief. Upcoming data is likely to confirm damage to the economy, but how much has been priced in by the market remained to be seen.
JPMorgan Chase & Co said on Saturday it expected real U.S. gross domestic product to fall 10% in the first quarter and plunge 25% in the second quarter. Advancing issues outnumbered declining ones on the NYSE by a 1.56-to-1 ratio; on Nasdaq, a 1.67-to-1 ratio favored advancers.
The S&P 500 posted one new 52-week high and two new lows; the Nasdaq Composite recorded six new highs and 30 new lows.
Volume on U.S. exchanges was 12.19 billion shares, compared to the 15.81 billion average for the full session over the last 20 trading days.
By Chuck Mikolajczak