U.S. stocks were modestly higher on Monday, after the benchmark S&P 500 notched its best weekly performance in nearly two months, as a sharp drop in Gilead Sciences reined in broader gains.

Gilead Sciences (GILD.O) slumped 9.9 percent to $97.71 as the biggest drag on both the S&P and Nasdaq 100 .NDX indexes. Express Scripts (ESRX.O), the nation's largest pharmacy 

benefit manager, has lined up a cheaper price from AbbVie Inc (ABBV.N) for its newly approved hepatitis C treatment and, in most cases, will no longer cover Gilead's treatments.

"That is very specific to Gilead, so that one is getting crushed, but it shouldn’t necessarily set a completely negative tone over the rest of the market, there is no reason for it," said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

"The market has had a decent move the last couple of days, so anything could cause people to take a little money off the table."

The benchmark S&P index .SPX rose 3.4 percent last week, boosted by a 5 percent jump over three sessions, after the U.S. Federal Reserve said it would take a "patient" approach toward raising interest rates and oil prices appeared to stabilize. The S&P energy index .SPNY surged nearly 10 percent for the week.

Brent crude LCOc1 hit a high of $62.97 and WTI crude rose to as much as $58.53 but reversed gains and turned lower after Saudi Arabia indicated it could increase its output. Brent was last down 54 cents at $60.84 while U.S. crude was last off 1.6 percent at $56.24. [O/R]

The Dow Jones industrial average .DJI rose 84.7 points, or 0.48 percent, to 17,889.5, the S&P 500 .SPX gained 2.68 points, or 0.13 percent, to 2,073.33 and the Nasdaq Composite.IXIC added 11.64 points, or 0.24 percent, to 4,777.02.

Housing shares were lower after existing home sales slumped 6.1 percent to an annual rate of 4.93 million units, the lowest level since May. The PHLX housing sector index lost 0.5 percent.

Trading volume is expected to be light this week due to the Christmas holiday, which could increase volatility. U.S. equity markets will open for an abbreviated session Wednesday and be closed on Thursday.

Achillion Pharmaceuticals Inc (ACHN.O) said it would test a combination of two of its experimental hepatitis C drugs which showed promise in separate studies. Its shares surged 17 percent to $16.63.

Caesars Entertainment Corp (CZR.O) said it would merge with affiliate Caesars Acquisition (CACQ.O) in an all-stock deal. Caesars Entertainment jumped 20 percent to $16.18 while Caesars Acquisition rose 8.1 percent to $10.23.

U.S. stocks were modestly higher on Monday, after the benchmark S&P 500 notched its best weekly performance in nearly two months, as a sharp drop in Gilead Sciences reined in broader gains.

Gilead Sciences (GILD.O) slumped 9.9 percent to $97.71 as the biggest drag on both the S&P and Nasdaq 100 .NDX indexes. Express Scripts (ESRX.O), the nation's largest pharmacy benefit manager, has lined up a cheaper price from AbbVie Inc (ABBV.N) for its newly approved hepatitis C treatment and, in most cases, will no longer cover Gilead's treatments.

"That is very specific to Gilead, so that one is getting crushed, but it shouldn’t necessarily set a completely negative tone over the rest of the market, there is no reason for it," said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

"The market has had a decent move the last couple of days, so anything could cause people to take a little money off the table."

The benchmark S&P index .SPX rose 3.4 percent last week, boosted by a 5 percent jump over three sessions, after the U.S. Federal Reserve said it would take a "patient" approach toward raising interest rates and oil prices appeared to stabilize. The S&P energy index .SPNY surged nearly 10 percent for the week.

Brent crude LCOc1 hit a high of $62.97 and WTI crude rose to as much as $58.53 but reversed gains and turned lower after Saudi Arabia indicated it could increase its output. Brent was last down 54 cents at $60.84 while U.S. crude was last off 1.6 percent at $56.24. [O/R]

The Dow Jones industrial average .DJI rose 84.7 points, or 0.48 percent, to 17,889.5, the S&P 500 .SPX gained 2.68 points, or 0.13 percent, to 2,073.33 and the Nasdaq Composite.IXIC added 11.64 points, or 0.24 percent, to 4,777.02.

Housing shares were lower after existing home sales slumped 6.1 percent to an annual rate of 4.93 million units, the lowest level since May. The PHLX housing sector index lost 0.5 percent.

Trading volume is expected to be light this week due to the Christmas holiday, which could increase volatility. U.S. equity markets will open for an abbreviated session Wednesday and be closed on Thursday.

Achillion Pharmaceuticals Inc (ACHN.O) said it would test a combination of two of its experimental hepatitis C drugs which showed promise in separate studies. Its shares surged 17 percent to $16.63.

Caesars Entertainment Corp (CZR.O) said it would merge with affiliate Caesars Acquisition (CACQ.O) in an all-stock deal. Caesars Entertainment jumped 20 percent to $16.18 while Caesars Acquisition rose 8.1 percent to $10.23.

Reuters

The police killings of unarmed blacks in Ferguson, Missouri, and elsewhere — and the investigations and tumultuous protests they inspired — was the top news story of 2014, according to The Associated Press' annual poll of U.S. editors and news directors.

In a year crowded with dramatic and often wrenching news developments around the world, the No. 2 story was the devastating outbreak of Ebola in West Africa, followed by the conflict in Iraq and Syria fueled by the brutal actions of Islamic State militants.

Among the 85 voters casting ballots, first-place votes were spread among 15 different stories. The Ferguson entry received 22 first-place votes, Ebola 11 and the Islamic State story 12.

The voting was conducted before the announcement that the United States and Cuba were re-establishing diplomatic relations and Sony Pictures' decision to withdraw its film "The Interview" in the wake of computer hacking and threats.

Last year's top story was the glitch-plagued rollout of President Barack Obama's health care overhaul, followed by the Boston Marathon bombing. The continuing saga of "Obamacare" made this year's Top 10 as well, coming in fifth.

The first AP top-stories poll was conducted in 1936, when editors chose the abdication of Britain's King Edward VIII.

Here are 2014's top 10 stories, in order:

POLICE KILLINGS: Some witnesses said 18-year-old Michael Brown had his hands up in surrender, others said he was making a charge. But there was no dispute he was unarmed and shot dead by a white police officer in Ferguson. In New York City, another unarmed black, Eric Garner, was killed after a white officer put him in a chokehold during an arrest for unauthorized cigarette sales. After grand juries opted not to indict the officers, protests erupted across the country, punctuated by chants of "Hands up, don't shoot" and "I can't breathe." In both cases, federal officials launched investigations.

EBOLA OUTBREAK: The first wave of Ebola deaths, early in the year, attracted little notice. By March, the World Health Organization was monitoring the outbreak. By midsummer, it was the worst Ebola epidemic on record, with a death toll now approaching 7,000, mostly in Liberia, Sierra Leone and Guinea. A Liberian man with the disease died at a Dallas hospital, followed by a few other cases involving U.S. health workers, sparking worries about the readiness of the U.S. health system.

ISLAMIC STATE: Militant fighters from the Islamic State group startled the world with rapid, brutal seizures of territory in Iraq and Syria. The U.S. and its allies responded with air strikes, hoping that Iraqi and Kurdish forces on the ground could retake captured areas. Revulsion toward Islamic State intensified as it broadcast videos of its beheadings of several Western hostages.

US ELECTIONS: For months, political oddsmakers sought to calculate if Republicans had a chance to gain control of the U.S. Senate. It turned out there was no suspense — the GOP won 54 of the Senate's 100 seats, expanded its already strong majority in the House of Representatives, and gained at the state level, where Republicans now hold 31 governorships.

OBAMACARE: Millions more Americans signed up to be covered under President Obama's health care initiative, but controversy about "Obamacare" raged on. Criticism from Republicans in Congress was relentless, many GOP-governed states balked at participation, and opinion polls suggested most Americans remained skeptical about the program.

MALAYSIA AIRLINES MYSTERY: En route from Kuala Lumpur to Beijing, Malaysia Airlines Flight 370 disappeared on March 8 with 239 people on board. In the weeks that followed, aircraft, ships and searchers from two-dozen countries mobilized to look in vain for the wreckage on the Indian Ocean floor. To date, there's no consensus as to why the plane vanished.

IMMIGRATION: Frustrated by an impasse in Congress, President Obama took executive actions in November to curb deportations for many immigrants residing in the U.S. illegally. GOP leaders in the House and Senate pledged efforts to block the president's moves. Prospects for reform legislation were dimmed earlier in the year by the influx of unaccompanied Central American minors arriving at the U.S. border, causing shelter overloads and case backlogs.

TURMOIL IN UKRAINE: A sometimes bloody revolt that toppled President Viktor Yanukovych in February triggered a chain of events that continued to roil Ukraine as the year drew to a close. Russia, worried that Ukraine would tilt increasingly toward the West, annexed the Crimean peninsula in March and backed an armed separatist insurgency in coal-rich eastern regions of Ukraine. The U.S. and its allies responded with sanctions against Russia.

GAY MARRIAGE: Due to a wave of federal court rulings, 19 more U.S. states began allowing same-sex marriages, raising the total to 35 states encompassing about 64 percent of the population. Given that one U.S. court of appeals bucked the trend by upholding state bans on gay marriage, there was widespread expectation that the U.S. Supreme Court will take up the issue and make a national ruling.

VA SCANDAL: The Department of Veterans Affairs became embroiled in a nationwide scandal over allegations of misconduct and cover-ups. Several senior officials were fired or forced to resign, including VA Secretary Eric Shinseki. At the heart of the scandal was the VA hospital in Phoenix; allegations surfaced that 40 veterans died while awaiting treatment there.

AP

U.S. President Barack Obama is expected to announce on Monday that U.S. Attorney Sally Yates will be his nominee for deputy attorney general, the No. 2 position at the Justice Department, a U.S. official said.

Yates, 54, currently serves as U.S. Attorney for the Northern District of Georgia where she is known as a close ally of outgoing U.S. Attorney

 Eric Holder's Justice Department.

She is a vocal proponent of Holder's policies on lowering incarceration rates by cutting jail time for low-level drug offenders.

During her time as a federal prosecutor in Georgia, Yates led several high-profile cases, including the successful prosecution of Eric Rudolph, who bombed a building in Atlanta during the 1996 Olympics.

Some Republicans, including Senators Ted Cruz, Mike Lee and David Vitter, have threatened to hold up confirmation of the new attorney general, who would oversee Yates, over disagreements with Obama's new immigration policy.

If confirmed, Yates will replace outgoing Deputy Attorney General James Cole, who is leaving in January and has not announced future plans.

The choice of Yates signals that little may change at the Justice Department after Holder leaves the post.

Yates currently serves on Holder's advisory committee of U.S. attorneys under the leadership of Loretta Lynch, Obama's pick to be the next attorney general.

"Their very effective partnership leading the U.S. attorney community will be taken to a whole new level," said U.S. Attorney for New Jersey Paul Fishman, who previously led the committee.

Reuters

BlackBerry Ltd (BB.TO)(BBRY.O) on Friday reported a bigger-than-expected drop in third-quarter revenue, sending shares of the struggling smartphone maker lower, even as it eked out a small adjusted profit and began generating cash flow again.

Revenue fell to $793 million from $1.19 billion a year earlier, falling short of analysts' expectations of $931.5 million.

"It's a number that obviously, to us, is not satisfying,"

Chief Executive Officer John Chen said on a conference call, noting that the focus has been on margins and cash flow. "We achieved that, but now we're going to turn our attention to revenue."

Shares fell 5.4 percent to $9.52 in morning trade.

Chen said hardware sales in the quarter were weaker than expected as production was limited and the company could only fulfill all device orders early in the fourth quarter.

At an analyst conference in San Francisco last month, Chen had said revenue could slide faster than expected as its sales profile changes.

BlackBerry had long made money charging system access fees, but now offers some basic services for free. As older devices are retired, that erodes revenue, but the company is aiming to boost hardware sales with its new Passport and Classic phones, buying time to scale up new premium services, which are not free, in 2015.

Cash flow was positive $43 million in the third quarter, versus negative $36 million in the second quarter. BlackBerry had said it was targeting break-even cash flow by the end of the fiscal year in February 2015.

Colin Gillis, an analyst at BGC Partners in New York, said Chen did a good job controlling expenses.

"The fact that he overachieved by turning cash flow positive this quarter - that's a great milestone," said Gillis. "It gets easier from here."

Excluding a one-time non-cash debenture charge and restructuring charges, the company reported a profit of 1 cent a share. Analysts polled by Thomson Reuters I/B/E/S expected a loss of 5 cents.

The Waterloo, Ontario-based company's net loss narrowed to $148 million, or 28 cents a share, in the quarter ended Nov. 29, from a year-earlier $4.4 billion, or $8.37 a share.

BlackBerry launched its long-awaited Classic smartphone on Wednesday, hoping to help win back market share and woo customers still using older devices with a keyboard. The phone resembles its once wildly popular Bold and Curve handsets.

Reuters

The U.S. government on Friday blamed North Korea for a devastating cyber attack against Sony Pictures, calling it an unacceptable act of intimidation and vowing to impose "costs and consequences" on those responsible.

It was the first time the United States had directly accused another country of a cyber attack of such magnitude on American soil and sets up a possible new confrontation between longtime foes Washington and Pyongyang.

The destructive nature of the attack, and threats from the hackers that led the Hollywood studio to pull a comedy movie depicting the assassination of North Korea's leader, set it apart from previous cyber intrusions, the FBI said.

President Barack Obama was expected to address the issue at a 1:30 p.m. (1830 GMT) end-of-year news conference, but his options for responding to the attack by the impoverished state appeared limited.

North Korea has been subject to U.S. sanctions for more than 50 years, but they have had little effect on its human rights policies or its development of nuclear weapons. It has become expert in hiding its often criminal money-raising activities, largely avoiding traditional banks.

"As a result of our investigation, and in close collaboration with other U.S. government departments and agencies, the FBI now has enough information to conclude that the North Korean government is responsible for these actions," the FBI said in a statement.

"North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves," it said. "Such acts of intimidation fall outside the bounds of acceptable state behavior."

NORTH KOREAN MALWARE

The FBI said technical analysis of malware used in the Sony attack found links to malware that "North Korean actors" had developed and found a "significant overlap" with "other malicious cyber activity" previously linked to Pyongyang.

North Korea has previously denied involvement, and a North Korean U.N. diplomat on Thursday declined to comment on the accusation that Pyongyang was responsible.

"Working together, the FBI will identify, pursue, and impose costs and consequences on individuals, groups, or nation states who use cyber means to threaten the United States or U.S. interests," said the FBI, the Federal Bureau of Investigation.

It stopped short of threatening specific U.S. action.

U.S. experts say U.S. options could include cyber retaliation, financial sanctions, criminal indictments against individuals implicated in the attack or even a boost in U.S. military support to South Korea to send a stern message to North Korea.

But the effect of any response could be limited given North Korea's isolation and the fact that it is already heavily sanctioned over its disputed nuclear program.

The attack on Sony, more than three weeks ago, was conducted by hackers calling themselves "Guardians of Peace."

It brought down the computer network at Sony Pictures Entertainment, prompted the leak of embarrassing emails, and led to Sony's cancellation of the Christmas Day release of "The Interview," which culminates in a scene depicting the assassination of President Kim Jong Un.

U.S. movie theaters had said they would not show the film after hackers made threats against cinemas and audiences. Many in Hollywood and Washington criticized Sony's cancellation as caving in to the hackers.

"CRIMINAL ACT"

Former Senator Chris Dodd, now the head of the Motion Picture Association of America, called the cyber attack on Sony Pictures, a unit of Sony Corp, a "despicable, criminal act."

Obama’s national security team is seeking a response tough enough to get its message across but not so extreme as to provoke North Korea to engage in further cyber warfare.

A dilemma for the administration is how much evidence it could make public without divulging the technological means it has to trace cyber attacks back to the source.

"This is unprecedented," said Dmitri Alperovitch, chief technology officer of cyber security firm CrowdStrike. "We have a dictatorial regime that attacked a private company on U.S. soil. Will we see a response from the U.S. government?"

Some of Hollywood's biggest names howled over the cancellation of the $44 million film, which stars James Franco and Seth Rogen, the latter also a co-director of the movie with partner Evan Goldberg.

The hacking of Sony appeared to mark a new phase in already-fraught relations between the United States and the reclusive government in Pyongyang, which have largely centered on U.S. efforts to rein in Pyongyang's nuclear weapons program.

Non-conventional capabilities such as cyber warfare and nuclear technology are the weapons of choice for the impoverished North to match its main enemies, defectors from the isolated state said in Seoul.

Reuters

T-Mobile US has agreed to settle a lawsuit filed by the U.S. government over unauthorized charges placed on customers' bills, a practice known as cramming, and to pay at least $90 million in refunds and fines, two U.S. government agencies said on Friday.

The FTC had filed a complaint against T-Mobile in July, saying that the company had put subscriptions for services like horoscopes or celebrity gossip delivered by text message, 

which often cost $9.99 a month, on consumers' mobile phone bills often without their knowledge.

T-Mobile USA received 35 to 40 percent of the amount charged, the Federal Trade Commission (FTC) said in July.

The Federal Communications Commission and state attorneys general were also involved in the probe.

Reuters

U.S. stocks were little changed on Friday after the market's best two-day run in more than three years, with shares of Nike weighing on the Dow while energy shares led a modest advance on the benchmark S&P 500.

The S&P 500 index had climbed 4.5 percent over the previous two sessions, spurred by the U.S. Federal Reserve's commitment to take a "patient" approach toward raising interest rates, while signaling it was on track to boost rates in 2015. That provided clarity and relief to investors over the policy outlook, analysts said.

Brent crude LCOc1 oil advanced above $60 a barrel on Friday, recovering from near a 5-1/2-year low, while WTI crude CLc1 climbed 3.3 percent to $55.90.

The benchmark stock index has risen more than 3 percent this week, putting the S&P on track for its best weekly performance in two months. It has erased nearly all the losses from the prior week, which were spurred by a sharp drop in oil prices.

Shares of Nike (NKE.N) shed 2.8 percent, a day after the company flagged slowing growth in western Europe.

At 1:16 p.m. EST, the Dow Jones industrial average .DJI fell 12.64 points, or 0.07 percent, to 17,765.51, the S&P 500 .SPX gained 2.58 points, or 0.13 percent, to 2,063.81 and the Nasdaq Composite .IXIC added 7.18 points, or 0.15 percent, to 4,755.57.

Quadruple witching - the expiration of stock options, index options, index futures and single-stock futures - may add to the day's volatility, along with the rebalancing of the S&P 500, which is scheduled to take effect after the close.

Shares of Red Hat (RHT.N) surged 10.9 percent after it raised its profit forecast for the full year and reported quarterly revenue and profit that beat expectations.

Advancing issues outnumbered declining ones on the NYSE by 1,780 to 1,258, for a 1.41-to-1 ratio; on the Nasdaq, 1,389 issues rose and 1,265 fell for a 1.10-to-1 ratio.

The benchmark S&P 500 index was posting 102 new 52-week highs and 5 new lows; the Nasdaq Composite was recording 94 new highs and 35 new lows.

Reuters

Suspicions that North Korea was behind a destructive hacking attack against Sony Pictures and a threat against movie theaters are intensifying calls for tougher U.S. steps to cut that country's access to hard currency and declare it once more as a state sponsor of terrorism.

At first glance, U.S. options for responding to the hacking attack are limited. Bringing the shadowy hackers to justice appears a distant prospect. A U.S. cyber-retaliation against North Korea would risk a dangerous escalation. And North Korea is already targeted by a raft of sanctions over its nuclear weapons program.

"We don't sell them anything, we don't buy anything from them and we don't have diplomatic relations," said William Reinsch, a former senior Commerce Department official who was responsible for enforcing international sanctions against North Korea and other countries.

But the U.S. isn't powerless if it concludes Pyongyang was behind the hack that has prompted Sony to cancel its Christmas Day release of the movie "The Interview."

While U.S. officials are saying privately that they believe North Korea was connected to the attack, the White House has not said so publicly. On Thursday, presidential spokesman Josh Earnest declined to blame North Korea, which has denied responsibility. He said he did not want to get ahead of investigations by the Justice Department and the FBI. Evidence shows the hacking was carried out by a "sophisticated actor" with "malicious intent," he said.

Rep. Ed Royce, R-Calif., chairman of the House Foreign Affairs Committee, said he did not doubt North Korea was involved. He called for tougher U.S. sanctions to cut Pyongyang's access to hard currency, by excluding from the U.S. financial system banks in other countries that hold North Korean funds.

"This is not a just a corporate security issue," Royce told The Associated Press. "It is an act of aggression against the United States by a foreign government. "

Legislation for such banking sanctions, sponsored by Royce and the committee's top-ranking Democrat, passed the House in the summer but was not taken up by the Senate. Current sanctions principally aim at preventing North Korea from trading weapons and acquiring nuclear and missile technology.

The Obama administration has been reluctant to embrace Royce's approach. The biggest impact would be felt by banks in China, complicating U.S. efforts to curry better ties with Beijing.

Evans Revere, a former State Department official and specialist on Korea, said if U.S. officials connect North Korea not only to the hacking attack but the threats to carry out 9/11-style attacks against movie theaters, a case could be made to put North Korea again on a list of state sponsors of terrorism. That designation now is held by Iran, Sudan, Syria and Cuba. North Korea was on the list for 20 years until it was taken off in 2008 by the Bush administration during nuclear negotiations. Royce said putting Pyongyang back on would be warranted.

While North Korea has denied it was involved, its government issued a statement earlier this month describing the hack as a "righteous deed." The movie, a comedy, is about a plot to assassinate North Korea's totalitarian leader, Kim Jong Un.

U.S. detective work pointing to North Korea appears so far to be largely circumstantial, based on subtle clues in the hacking tools left behind and the involvement of at least one computer in Bolivia previously traced to other attacks tied to the North Koreans. Still, the evidence has been considered conclusive enough that a U.S. official told the AP that investigators have now connected the attack to North Korea.

Earnest said the investigation was progressing. He said President Barack Obama's national security advisers were considering a range of options for a "proportional response."

Victor Cha, who served as Asia policy director in the George W. Bush White House, said despite the long history of censuring North Korea over its weapons development, there's no diplomatic playbook to follow in a case like this. "On the nuclear and missile side we have established a pattern of interactions between states on how to respond, but in the cyber world there's no rules right now," he said.

Washington struggles to keep its interaction with North Korea on an even keel at the best of times, through periodic nuclear and rocket tests and dire threats of military reprisals. The U.S. retains nearly 30,000 troops in neighboring South Korea.

Multination talks aimed at getting North Korea to give up its nuclear arsenal in exchange for aid have stalled for several years, and Pyongyang has been frustrated by what it considers a U.S. reluctance to engage in dialogue. The animosity has built as the U.S. has supported a U.N. inquiry into North Korea's dire human rights record.

AP

Novak Djokovic and Serena Williams have been named 2014 World Champions by the International Tennis Federation (ITF).

The annual award takes in performances on the regular Tour and grand slams.

Wimbledon champion Djokovic takes the men's prize for the fourth time having won seven titles this season and the year-end top ranking for the third time in four years.

Williams wins the award for the fifth time in a career which has brought her 18 grand slam singles titles -- the most recent at this year's U.S. Open.

"I'm so honored to be named ITF World Champion for the fifth time. This was a year of challenges and triumphs, so to win another Grand Slam and retain my year-end No. 1 ranking is an accomplishment I'm very proud of," she said.

"I'm grateful to have the support of the tennis community in every way possible. I can't wait for 2015."

Americans Bob and Mike Bryan were named ITF men's doubles champions while Sara Errani and Roberta Vinci of Italy won the women's honor.

Reuters

U.S. stocks rose on Thursday, with each of the major indexes climbing more than 1 percent, building on the prior session's rally after the U.S. Federal Reserve's policy statement and oil prices that showed signs of steadying.

The benchmark S&P 500 index had notched its best day since October 2013 on Wednesday after the Federal Reserve gave an upbeat assessment of the U.S. economy and said it 

would take a patient approach toward raising interest rates.

"The bottom line is a June (rate hike) is still in play and even doves need to tighten at some point when the numbers start looking good," said James Liu, global market strategist at JPMorgan Funds in Chicago.

"The economy is improving, things are picking up, they need to get the ball rolling on this."

Oil prices continued to climb Thursday, extending a rebound off five-year lows, with Brent crude LCOc1 rising as high as $63.70 and WTI crude CLc1 up nearly 2 percent, before paring gains. Exxon Mobil (XOM.N) rose 2 percent to $90.80 and the S&P Energy sector .SPNY rose 1.5 percent after a jump of over 4 percent in the prior session.

"On the oil front, the fact you have seen energy pop by about five percent the last two days, there is the notion out there that oil has certainly stabilized," said Liu.

The Dow Jones industrial average .DJI rose 225.8 points, or 1.3 percent, to 17,582.67, the S&P 500 .SPX gained 26.92 points, or 1.34 percent, to 2,039.81, and the Nasdaq Composite.IXIC added 61.71 points, or 1.33 percent, to 4,706.02.

Weekly jobless claims fell by 6,000 to a seasonally-adjusted 289,000, against expectations for 295,000, suggesting the labor market continued to strengthen.

Financial data firm Markit said its "flash" services Purchasing Managers Index hit 53.6 in December, down from November's final reading of 56.2 and well below economists' expectations for a rise to 56.9. However, it remained above the 50 threshold indicating expansion.

Oracle Corp (ORCL.N) advanced 7.5 percent to $44.25 after quarterly results topped Wall Street expectations, helping to lift the S&P technology sector .SPLRCT by 1.8 percent.

Canadian convenience store operator Alimentation Couche-Tard Inc (ATDb.TO) said it will buy U.S. convenience store chain The Pantry Inc (PTRY.O) for $1.7 billion, including debt. Pantry shares gained 2.5 percent to $36.40.

Rita Aid (RAD.N) shares surged 12.4 percent to $6.81 after the drugstore chain's quarterly results topped expectations and it boosted its 2015 outlook.

Advancing issues outnumbered declining ones on the NYSE 2,611 to 288, for a 9.07-to-1 ratio; on the Nasdaq, 1,912 issues rose and 442 fell, for a 4.33-to-1 ratio favoring advancers.

The S&P 500 was posting 33 new 52-week highs and 5 new lows; the Nasdaq Composite was recording 87 new highs and 10 new lows.

Reuters