U.S. Stocks Close Sharply Higher in Wake of Paris Attacks

Image: Traders pause for a moment of silence for Paris attack victims at the New York Stock Exchange.
Traders pause for a moment of silence for Paris attack victims at the New York Stock Exchange at the start of the trading day on Monday.JUSTIN LANE / EPA

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By Jenny Cosgrave, CNBC and Evelyn Cheng, CNBC

U.S. stocks gained Monday on a sharp jump in oil prices boosted by geopolitical concerns following weekend terror attacks in Paris.

The major U.S. averages closed more than 1 percent higher, recovering some of their sharp declines last week.

The Dow Jones industrial average rose more than 225 points in afternoon trade, with Chevron, Exxon Mobil and UnitedHealth contributing the most to gains.

The S&P 500 traded more than 1 percent higher, helped by gains of more than 3 percent in the energy sector as oil prices recovered from an earlier dip.

U.S. crude oil futures settled up $1.00, or 2.45 percent, at $41.74 a barrel. Brent also held higher near $44.70 a barrel. Traders attributed most of the gains to short-covering following geopolitical concerns and said they would likely be temporary.

Telecommunications rose more than 1.5 percent as the second-best performer in the S&P 500.

The Dow transports traded slightly higher after briefly falling 1 percent as airlines weighed.

The Dow Jones industrial average finished up 237.31 points, or 1.38 percent; the S&P 500 gained 30.09 points, or 1.49 percent; and the Nasdaq Composite added 56.73 points, or 1.15 percent.

Traders pause for a moment of silence for Paris attack victims at the New York Stock Exchange at the start of the trading day on Monday.JUSTIN LANE / EPA

The Nasdaq composite recovered from an intraday dip as Apple gained about 1.5 percent. Amazon briefly fell 2 percent and the iShares Nasdaq Biotechnology ETF (IBB) traded slightly higher.

"I think the positive tone to the market owes something to the fact that European shares moved higher," said John Lonski, chief economist at Moody's. He also noted some support from greater confidence in a gradual pace of rate hikes by the Federal Reserve.

European stocks held mostly higher after a series of coordinated terrorist attacks in Paris late Friday left more than a 100 dead and hundreds injured.

Short-term German government bonds hit record lows on Monday as investors looked to safety, with U.S. Treasurys also seeing steady demand, with yields on the 10-year yield pushed down to trade around 2.25 percent.

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Elsewhere gold traded around 0.6 percent higher at $1,087 an ounce and oil prices climbed, recovering from some of last week's heavy selling, but remained near August lows. U.S. crude futures were trading 0.4 percent higher at $40.90 a barrel early Monday, while Brent was up more about 1.8 percent near $44.38 a barrel as of 8:52 a.m., ET.

Top European Central Bank policymakers – including President Mario Draghi will be speaking Monday and might give clues to the likely monetary policy response to the tragic events.

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France has been rocked by a series of coordinated terrorist attacks in Paris on Friday night that left 129 dead and hundreds injured.

The Islamist militant group that calls itself "Islamic State" (ISIS) claimed responsibility for the attacks. France responded at the weekend by launching air strikes against ISIS targets in Syria.

The November Empire Manufacturing index came in at negative 10.7. October's print was negative 11.4.

Investors will also be looking to the minutes from the October Federal Open Market Committee meeting, released on Wednesday.

In Asia overnight, stocks were hit by a sell-off on Monday, with tourism-related plays among the hardest-hit, as sentiment was badly dented by the Paris attacks. In other Asia news, data released Monday showed Japan's economy slid back into recession in July-September.

"The atrocious events in Paris are, of course, the immediate cause of a weaker euro, and stronger yen. However, I am struck that the reaction to such atrocities has changed a lot since the attacks on New York, Washington, D.C., and the skies above America in September 2001," said global strategist at Societe Generale, Kit Juckes in a note to clients published early Monday.

"Then, we stood and stared, in shock. The U.S. and the global economy were slowing before the World Trade Centre towers collapsed and the emotional reaction made sure the outcome was severe. But we've moved on. More appalled than shocked," he added