US stocks rebound on strong Exxon earnings

Shaking off Friday's sharp losses amid worries about Egyptian turmoil, the Dow Jones Industrial Average rose 68.23 points (0.58 per cent) to finish at 11,891.93.

The broader S&P 500 index advanced 9.78 points (0.77 per cent) to 1,286.12 and the tech-rich Nasdaq climbed 13.19 points (0.49 per cent) to 2,700.08.

"Concerns about the continued political unrest in Egypt, which pressured markets on Friday, are easing as traders discount the impact of the Middle East turmoil on global economic activity," Charles Schwab analysts said in a client note.

Investor sentiment got an early lift before the market opened as ExxonMobil, the largest US oil and gas company, reported fourth-quarter profit jumped 53 per cent from a year earlier to $9.25 billion on the back of high oil prices and strong demand.

Shares in the biggest of the Dow blue chips jumped 2.14 per cent to $80.68, buoyed by surging oil prices that topped $100 a barrel in London amid worries about massive anti-government protests in Egypt.

"A lot of people were fearing the worst ahead of the weekend, so we are getting a little bit of a bounce off the fact that the Suez Canal is not shut down," said Marc Pado at Cantor Fitzgerald.

Analysts said the markets were also encouraged by better-than-expected economic data on manufacturing and consumer spending, the biggest driver of US output.

On the eve of its national manufacturing report, the Institute for Supply Management said its Chicago purchasing managers index rose for a 16th month to its highest level since July 1988.

And the Commerce Department reported consumer spending rose 0.7 per cent in December, a tick above expectations, after a 0.3 per cent gain the prior month.

"The news is still positive for the economy," Pado said. "It is a good indication that we are moving in the right direction."

Merger and acquisition activity also spurred buying, analysts said.

In the mining sector, coal giant Alpha Natural Resources tumbled 7.17 per cent to $53.73 after announcing Saturday it would buy rival Massey Energy for $8.5 billion. Massey soared 9.84 per cent to $62.86.

Computer chip maker Intel's shares closed unchanged after heavy trading. Intel cut its first-quarter forecast, citing a design flaw in a recently released support chip. The firm said it had begun manufacturing a new version that fixes the problem.

The bond market weakened.

The yield on the 10-year Treasury note rose to 3.39 per cent from 3.33 per cent Friday, while the 30-year yield increased to 4.57 per cent from 4.525 per cent. Bond yields and prices move in opposite directions.