NEW YORK (Reuters) - Stocks climbed on Monday as last week's sharp losses brought buyers back to the market and Microsoft Corp (MSFT.O) shares jumped after an activist investor took a stake in the company.
Shares of Caterpillar (CAT.N) rose 2.8 percent to $82.71, helping the Dow as the company said a pullback in spending by mining companies was temporary. The stock's gains came despite a lowered 2013 outlook from the world's largest maker of construction and mining equipment.
Lifting both the S&P 500 and Nasdaq, Microsoft Corp (MSFT.O) jumped 3.6 percent to $30.83 after CNBC reported that ValueAct Capital had taken a $2 billion stake in the company.
The market's bounce followed the S&P 500's worst weekly loss since November and suggested to some market watchers that a much debated market correction has yet to arrive.
"It still seems like the bulls are buying the dips. Unless there is a fair amount of bad news, I think the market hangs in at these levels," said Uri Landesman, president of Platinum Partners in New York, who added he still expects the market to be "significantly lower" in six months.
Google Inc (GOOG.O) shares, which fell as much as 3.1 percent within the first 10 minutes of Monday's trading session, ended up 0.03 percent at $800.11. On Friday, Google shares had gained 4.4 percent after the company had posted upbeat results.
The Dow Jones industrial average .DJI rose 19.66 points, or 0.14 percent, to 14,567.17 at the close. The Standard & Poor's 500 Index .SPX gained 7.25 points, or 0.47 percent, to 1,562.50. The Nasdaq Composite Index .IXIC advanced 27.50 points, or 0.86 percent, to close at 3,233.55.
Last week's market decline came amid signs of slowing growth from China, which also led to a steep drop in commodity prices.
Energy and materials shares were among the best performers of the day on the S&P 500, bouncing back from last week's big losses. The S&P 500 energy index .SPNY was up 1 percent, with the materials index .SPLRCMA was also up 1 percent. The S&P technology index .SPLRCT was up 0.9 percent.
"A decent tech tape is lifting all boats today. I think they're flocking towards the ones you've already seen good numbers from. You're not going to get blindsided by something coming out, if you've already got the news," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
S&P 500 earnings growth is forecast at 2.2 percent for the first quarter, based on results from 21 percent of the companies and estimates for the rest, Thomson Reuters data showed. That is up from an April 1 forecast of 1.5 percent growth.
Among other gainers, shares of Halliburton (HAL.N), the oilfield services company, rose 5.6 percent to $39.29 after the company posted quarterly results and said it is in talks to settle private claims against it in a trial.
After the bell, shares of Netflix (NFLX.O) shot up 25 percent to $218 following the release of its results. Meanwhile, shares of Texas Instruments (TXN.O) were up 0.1 percent at $34.83 after it posted revenue and earnings that were slightly ahead of Wall Street expectations.
Volume was roughly 5.6 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the average daily closing volume of about 6.4 billion this year.
That is a decline from much of last week, when overall volume was higher than normal. It averaged 7.3 billion shares traded for the five sessions.
Advancers outpaced decliners by about 17 to 12 on the NYSE and by about 13 to 12 on the Nasdaq.
Editing by Jan Paschal, G Crosse