Wall Street gains as Egypt fears wane

US stocks rose on Monday on strong earnings and signs of a strengthening economic recovery, although a surge in the price of oil highlighted the increased political risk in the Middle East.

After a weekend of digesting the political turmoil in Egypt, investors took a more sanguine view of events after sending stocks sharply lower on Friday. The Market Vectors Egypt Index ETF rose 6.3%.

"It's creating a great opportunity to step up and increase exposure to emerging markets and other areas of the international markets," said Robert Lutts, president and chief investment officer at Cabot Money Management in Salem, Massachusetts. "I'm optimistic that this will be resolved and blow over."

Relief that the turmoil appeared not to be escalating as feared allowed investors to focus on data showing stronger US personal spending and regional manufacturing as well as solid earnings from Exxon Mobil Corp, whose shares rose nearly 1.7% to USD 80.34.

NYMEX crude futures climbed 3% to USD 92.16 per barrel on concerns the unrest could spread to oil-producing nations or disrupt the flow of oil through the Suez Canal. The S&P energy index jumped 2.3% and was the biggest gaining sector.

The Dow Jones industrial average gained 23.65 points, or 0.20%, to 11,847.35. The Standard & Poor's 500 Index rose 5.90 points, or 0.46%, to 1,282.24. The Nasdaq Composite Index added 6.04 points, or 0.22%, to 2,692.93.

The CBOE Volatility index VIX, Wall Street's so-called fear gauge, dipped 1.95% to 19.65, after having surged by 24% on Friday in the largest percentage gain since May.

Wall Street posted its biggest one-day loss in nearly six months on Friday as the anti-government rioting in Egypt sparked a flight to less risky assets.

On the economic front, the Commerce Department said US consumer spending rose in December for a sixth straight month, while a separate report showed business activity in the US Midwest grew more than expected in January.

The strengthening data lifted optimism ahead of Friday's non-farm payrolls report, expected to show the US economy added 145,000 jobs in January.

M&A activity also helped lift stocks. Massey Energy Co rose 10% to USD 62.99 after Alpha Natural Resources agreed to a USD 7.1 billion deal to create the second largest US coal miner by market value.

In other M&A action, CNOOC Ltd will pay USD 1.3 billion in its second shale deal with America's Chesapeake Energy Corp, the latest move by China's top offshore oil producer in its aggressive drive for overseas acquisitions.

Chesapeake advanced 7.1% to USD 29.27.

Exxon Mobil Corp gained 1.8% to USD 80.41 after the world's largest publicly traded oil company reported a higher-than-expected 53% increase in quarterly profit.

Technology bellwether Intel Corp fell 1.8% to USD 21.07 after cutting its first-quarter revenue forecast by USD 300 million due to costs for correcting a design flaw in one of its chips.