Some worry that the momentum won't last, and that deep discounting will hurt stores. Macy's fell $1.87, or 4.5 percent, to $39.86. Saks dropped 29 cents, or 2.8 percent, to $10.23. Target declined $1.71, or 2.6 percent ,to $62.77.
Abercrombie & Fitch was an exception, rising 21 cents to $44.61.
The cliff cast a pall. A government report released Monday warned that a sudden increase in taxes would crimp the spending of middle class families next year, and some analysts wondered whether families would curb spending before the year is over.
The report, by President Barack Obama's National Economic Council and his Council of Economic Advisers, estimated that a married couple earning between $50,000 and $85,000 with two children would see a $2,200 increase in their taxes.
In Europe, leaders of European Union countries tried to reach a deal to lend more money to debt-crippled Greece. The ministers have failed twice in the last two weeks to reach an agreement to release â¿¬44 billion, or $56.8 billion.
In the U.S., though, "Most of these uncertainties have been with us for quite some time," Sam Stovall, chief equity strategist at S&P Capital IQ, wrote in a note Monday, "and are now regarded by many as annoyances to resolve rather than obstacles to fear."
In the bond market, the yield on the 10-year U.S. Treasury note fell 2 percentage points to 1.66 percent from late Friday.
In other stock trading:
â¿¿ McGraw-Hill announced it would sell its education unit to a private equity firm. The company's stock rose 20 cents, or 0.4 percent, to $51.89.
â¿¿ Facebook stock jumped $1.94, or 8.1 percent, to $25.94 after a Bernstein analyst upgraded his rating of the company, predicting it will beat revenue expectations for the near future.