Financials pull stocks higher ahead of earnings

Among financial stocks, Goldman rose $7.57, or 5.3 percent, to $149.44 and Bank of America rose $1.11, or 9.3 percent, to $12.99.

The KBW Bank Index, which tracks 24 of the nation's largest banks, rose 6.5 percent.

The short-term buy call on Goldman from Whitney comes after the stock has risen 72 percent this year, but investors appeared to be looking past the fact that it had already had such a big advance.

Many analysts had been expecting the company would turn in strong profits for the second quarter. Goldman last month repaid the $10 billion it received last fall as part of the government's $700 billion bank bailout program.

Banks have taken some of the biggest blows among U.S. companies since the recession began in late 2007 as investment and loan losses mounted.

Some financial stocks were still struggling, however. Commercial finance lender CIT Group Inc. said it is talking with regulators about ways to improve its short-term liquidity as recent losses may jeopardize its compliance with capital requirements. The stock fell 18 cents, or 11.8 percent, to $1.35.

Earnings reports will give investors a chance to see whether there was any meaningful economic improvement during the second quarter. Reports are expected from major companies in a range of industries this week, including Johnson & Johnson, International Business Machines Corp., and General Electric Co. and technology bellwethers Intel Corp. and Google Inc.

The S&P 500 index has fallen for four straight weeks as investors worried that a 40 percent rally from early March had been too quick.

The gains in stocks cooled demand for the safety of government debt, hurting prices and lifting yields. The yield on the benchmark 10-year Treasury note jumped to 3.35 percent from 3.30 percent late Friday.

The dollar was mostly lower against other major currencies, while gold prices rose.

Light, sweet crude fell 20 cents to settle $59.69 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies rose 12.33, or 2.6 percent, to 493.31.

Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.2 billion shares compared with 922 million Friday. The market's moves can be skewed when fewer shares are changing hands.

Overseas, Britain's FTSE 100 rose 1.8 percent, Germany's DAX index gained 3.2 percent, and France's CAC-40 rose 2.3 percent. Japan's Nikkei stock average fell 2.6 percent.