MARKET SNAPSHOT: U.S. Stocks Rally Amid China Easing Hints, Deal News

By Anora Mahmudova and Barbara Kollmeyer, MarketWatch

Catamaran surges after UnitedHealth Groups buys the company

NEW YORK (MarketWatch) -- U.S. stocks rose sharply on Monday, with the Dow industrials soaring more than 260 points early in the trading driven by dovish comments from China's central-bank chief as well as continued flurry of deal announcements.

The S&P 500 (SPX) rose 27 points, or 1.31%, to 2,087.9, with gains across the board. Energy and financials were leading the index higher. The Dow Jones Industrial Average (DJI) was up more than 270 points, or 1.6%, to 17,990. Among the blue-chips, nearly all of the 30 components were trading higher.

The Nasdaq Composite (RIXF) gained 56 points, or 1.15%, to 4,947.3

"Today's rally suggests investors still prefer aid from central banks to actual growth in the economy and are willing to bear above-average risks for below-average returns, said Channing Smith, managing director at Capital Advisors.

On Sunday, the PBOC governor said (http://www.marketwatch.com/story/china-central-bank-chief-warns-of-us-dollar-strength-2015-03-29) he saw "more room" for China to ease policy if the economy stays soft and inflation continues to weaken. On Monday, Chinese stocks closed at a seven-year high (http://www.marketwatch.com/story/chinese-stocks-rally-on-silk-road-details-2015-03-30).

"Investors had been worried about China's slowing growth, so encouraging comments from their central bank lifted markets. And merger news also contributed to the sudden rush into stocks," said Kate Warne, investment strategist at Edward Jones.

"Stock markets tend to over-react to good and bad news. While it is positive that markets have once again showed resiliency and bounced back, I am not sure a 200+ gain on the Dow is warranted," Warne said.

Smith said that he's taking a cautious approach to Monday's soaring moves. "Our approach is to raise cash at this point. The higher stock market rises, the more conservative we get," Smith added.

Read: If the Fed doesn't hike rates, it will be due to one of these charts ()

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Big week for data: The shortened week for investors will still see nonfarm-payrolls data arrive on Friday, when markets are closed (http://www.marketwatch.com/story/when-do-markets-close-for-good-friday-2015-03-27). Read: When do markets close for Good Friday? (http://www.marketwatch.com/story/when-do-markets-close-for-good-friday-2015-03-27)

Investors assessed data on consumer spending and personal income. Continued softness in economic data has put the Federal Reserve into patient mode. On Friday, Federal Reserve Chairwoman Janet Yellen said gradual hikes are likely this year, but that the central bank will move cautiously, speaking at a conference sponsored by the San Francisco Fed.

U.S. consumers barely increased spending in February in another signal that the economy slowed in the first quarter. Personal incomes, meanwhile, rose for the fourth time in a five months and the saving rate climbed for the third straight month.

Separately, pending home sales in February reached their highest level since June 2013, a trade group said Monday.

Stocks to Watch: Shares of Catamaran Corp.(SXCI) surged 24% after UnitedHealth Group Inc.(UNH) said it would buy the pharmacy-benefit manager for around $12.8 billion in cash. UnitedHealth rose 3.4%.

Teva Pharmaceutical Industries Ltd.(TEVA) on Monday announced an agreement to buy Auspex Pharmaceuticals Inc.(ASPX) in a deal valued at $3.2 billion. Auspex jumped 42%% to $100.54.

For more on today's notable movers read Movers & Shakers column (http://www.marketwatch.com/story/aar-cal-maine-american-realty-capital-earnings-in-focus-2015-03-29).

Other markets: Gains weren't limited to stock futures, as the Stoxx Europe 600 index rallied Monday, with the benchmark rising 1%.

U.S. crude-oil prices (http://www.marketwatch.com/story/iran-talks-keep-crude-oil-futures-under-pressure-in-asia-2015-03-30-31032459) settled lower, falling 19 cents, or 0.4%, to close at $48.68 a barrel (CLK5), while gold (http://www.marketwatch.com/story/gold-loses-ground-again-as-data-anticipation-builds-2015-03-30) prices (GCK5) closed lower for the second session, falling $15, or 1.3%, to settle at $1,184.80 an ounce . The dollar (http://www.marketwatch.com/story/dollar-inches-up-against-euro-yen-as-big-data-week-kicks-off-2015-03-30)(DXY) rose against major currencies.

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