Stabilizing oil prices and more signs of a stronger economy sent stocks sharply higher Monday. The Standard and Poor's 500 index had its best start of any year since 1998.
Oil prices fell to about $97 a barrel as worries over the global oil market eased after reports that some Libyan ports reopened to oil tankers and Saudi Arabia was boosting exports. Prices surged above $100 a barrel last week as clashes between rebels and government-backed forces intensified in Libya.
The Commerce Department said consumer incomes rose by the largest amount in nearly two years in January, thanks to a tax cut that began last month. The head of the Federal Reserve Bank of New York, meanwhile, said that the country's economic outlook has "improved considerably."
The Dow Jones industrial average gained 95.89 points, or 0.8 percent, to close at 12,226.34. The Standard and Poor's 500 rose 7.34, or 0.6 percent, to 1,327.22. The Nasdaq composite rose 1.22 points, or less than 0.1 percent, to 2,782.27.
All three major stock indexes posted their third straight month of gains. The last time that happened was in the three-month period that ended last April. The S&P 500 gained 3.2 percent in February, the Dow 2.8 percent and the Nasdaq 3 percent. Those figures don't include dividends.
The S&P index has risen 5.5 percent in January and February, its fastest increase at the start of a year since it jumped 8.1 percent in the first two months of 1998, according to Howard Silverblatt, senior index analyst at S&P.
A new round of corporate deals also helped push some stocks higher. Ventas Inc., which owns senior housing communities, said it would buy Nationwide Health Properties Inc. in a $5.8 billion deal that will create the nation's largest health care real-estate investment trust. Nationwide Health rose 10 percent, while Ventas fell 3 percent.
Australia's Equinox Minerals Limited, a mining company, said it would make a hostile bid to acquire Canada's Lundin Mining Corp. for $4.9 billion in cash and stock. Lundin rose 19 percent while Equinox fell 9 percent. Both trade on the Toronto Stock Exchange.
The deals came just two days after Warren Buffett said in his annual letter to investors that he is "itchy" to make more big acquisitions for his company, Berkshire Hathaway Inc. Berkshire had $38 billion in cash at the end of last year. Its shares rose 2.8 percent.
Humana Inc. rose 3.8 percent after the health insurer raised its 2011 earnings forecast for the third time since November. The company also said it regained a contract to provide coverage for 3 million active duty and retired military members and their families in several Southern states.
Amazon.com Inc. fell 2.2 percent after an analyst at UBS downgraded the company and said that its new video streaming service will cut into its profit margins.
Bond prices were little changed. The yield on the 10-year Treasury note was unchanged from late Friday at 3.42 percent.
Two stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume came to 3.5 billion shares.