Dow Rallies 348 Points to Kick Off March After Manufacturing Report

U.S. stocks kicked off March on a solid note Tuesday as the major averages traded about 2 percent higher, helped by a rise in oil prices and a better-than-expected ISM manufacturing report.

The Dow Jones industrial average traded more than 300 points higher to hit its highest level since Jan. 7. Apple briefly traded more than 4 percent higher to top $100.50 a share in afternoon trade as one of the top contributors to gains.

"I think it's near-term price action, possibly some chart chasing, momentum chasing, which continues to forge us higher into the close," said John Caruso, senior market strategist at RJO Futures.

Stocks are rising "on really nothing … that would warrant a (more than 2) percent rise in stocks today," he said.

The major averages extended gains in afternoon trade as oil held above $34 a barrel. "I think when we broke 1,955 on the S&P that got us moving in the right direction. I think you saw a lot of people covering shorts at 1,955," said Peter Coleman, head trader at Convergex.

The S&P 500 had its best morning since Aug. 27 with a rise of more than 1.5 percent through noon, according to Bespoke Investment Group. The index has seen 208 such morning rallies since 1983, with an average additional gain of 0.37 percent in the afternoon from noon to the close and positive returns 69 percent of the time, the note said.

Financials traded more than 3 percent higher to lead advancers.

Of the several positive factors for stocks, "I would tilt more towards oil. The reality is we've been trading pretty closely with oil in the last couple of weeks," said Kelly Bogdanov, vice president and portfolio analyst at RBC Wealth Management.

U.S. crude oil futures recovered from an intraday dip to settle up 65 cents, or 1.93 percent, at $34.40 a barrel.

The Dow Jones industrial average traded more than 300 points higher, while the Dow transports held more than 2 percent higher.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell more than 10 percent in intraday trade to hit 18, its lowest since Dec. 31.