Stocks kicked off the first trading day of the week with a bang on Monday, as the Dow logged its best day in two months, lifted by upbeat economic data from China, despite worries over a possible U.S. military strike against Syria.
"We've just gotten to the point where the markets are sick of worrying," said Bruce McCain, chief investment strategist at Key Private Bank. "We can obsess about the Syrian conflict or the beginning of QE tapering (Federal Reserve stimulus policies) , but for the most part, things are looking a lot better than they have been—the economy's not going gangbusters, but the general trend has been toward some improvement."
The Dow Jones Industrial Average rallied nearly 1 percent, shooting above the psychologically-important 15,000 level, to close 140 points higher, propelled by Caterpillar and Alcoa.
The S&P 500 and the Nasdaq also finished more than 1 percent higher. The Nasdaq 100 hit its highest level since November 2000.
So far in September, the Dow has rallied more than 1.5 percent, while the S&P 500 and Nasdaq have jumped more than 2 percent each.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, slid below 16.
All key S&P sectors finished higher, boosted by materials and techs.
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But Syria will likely remain in focus as Congress returns from its summer recess. President Obama is trying to persuade members of Congress to vote for a military strike, but he faces diplomatic pressure to wait for a United Nations report due later this week before taking action. Secretary of State John Kerry sai don Monday that "resolution" would not be found on a battlefield.
(Read more: Will Syria keep Larry Summers out of the Fed?)
"If strikes are approved, geopolitical tensions will rise and financial markets will almost certainly be unsettled," said HSBC Chief Economist Stephen King in a research note.
(Read more:Syria will fan flames of Sept. volatility)
"We like the Dow being above 15,000 and the S&P 500 above the 200-day moving average, but it's all on light volume and everyone waiting—the wildcard is Syria," said Alan Valdes, director of floor operations at DME Securities. "The President is speaking tomorrow."
Still, Valdes said he is encouraged to see some positive economic reports around the world, including the recent Chinese data.
Late Sunday, China reported its exports grew by 7.2 percent in August, exceeding market expectations for a gain of 6 percent, while consumer inflation held steady.
Following a week where Treasury yields zipped to two-year highs and 10-year benchmark bonds broke the psychologically important 3 percent level, this week's Treasury auctions will also be in the spotlight.
Last week, U.S.non-farm payrolls increased by 169,000 in August, undershooting consensus estimates of 180,000, which will be a key consideration for the Federal Reserve next week, when it meets to debate when to start slowing down its asset purchasing program. The debate continued over the weekend, when International Monetary Fund Managing Director Christine Lagarde told CNBC that the Fed could not afford to ignore emerging markets when it weighed up future policy.
(Read more:Why tapering doesn't mean QE is going away)
Earlier, San Francisco Federal Reserve President John Williams said he would go into next week's Fed policy-setting meeting with an open mind on whether to begin cutting the pace of the Fed's $85 billion monthly bond purchases.
On the economic front, consumer credit growth rose at a 4.4 percent annual rate in July, expanding by $10.4 bullion, down from a 5-percent rate in June, according to the Federal Reserve. Analysts expected a $12.5 billion gain.
First published September 9 2013, 1:10 PM