Updated from 4:10 p.m. EDT

Stocks rallied sharply after several weeks' selling Monday, as investors used an upside pre-announcement from the world's largest fast-food chain as a reason to go bargain-hunting in a technically oversold market.

The

Dow Jones Industrial Average closed up 213 points, or 2.3%, to 9687. The

Nasdaq gained 49 points, or 3.2%, to 1553, and the

S&P 500 added 29 points, or 2.9%, to 1036. Volume was relatively light,with 1.23 billion shares changing hands on the NYSE and 1.54 billion trading on the Nasdaq.

The Dow was pushed higher by banking and financial shares, among them

Citibank

(C) - Get Report

, which gained 6.5%, and

J.P. Morgan

(JPM) - Get Report

, which rose 7.5%. Meanwhile biotechnology shares underpinned the Nasdaq's rise, with

Amgen

(AMGN) - Get Report

rising 6.3% and

Biogen

(BGEN)

, which gained 3.8%.

McDonald's

(MCD) - Get Report

, a Dow component, raised its second-quarter forecast Monday morning, citing stronger currencies overseas. The company's shares traded up 2.4% to $29.82 on the news.

Phone and data giant

Qwest Communications

(Q)

ousted its high-profile chief executive Joseph Nacchio over the weekend. Richard Notebaert, former

Tellabs

(TLAB)

CEO, will succeed Nacchio, who has spent the last six months trying to convince investors the company has enough money to avoid bankruptcy and won't succumb to regulatory scrutiny. The stock climbed 20.5% to $5 on the

New York Stock Exchange.

Meanwhile, fellow data carrier

XO Communications

(XO)

has taken the now-unusual step of filing for Chapter 11 bankruptcy protection without a firm restructuring plan in place. XO is trying to enforce a year-old agreement with Ted Forstmann, its largest investor, for new equity and a debt swap, and failing that proposed a standalone reorganization that would also need creditor support. The company will continue to operate as usual during the reorganization with no proposed job cuts.

In the

ImClone

(IMCL)

saga, a report says Martha Stewart's broker has a different recollection as to the events surrounding her stock sale than she does. According to the

Wall Street Journal

, the broker said he and Stewart, who is CEO of

Martha Stewart Living

(MSO)

, agreed to a strategy to sell the stock if it fell below $60 in mid-December, not November as Stewart has stated publicly. The exact date could be of interest to investigators looking into whether Stewart had inside information when she unloaded about 4,000 ImClone shares days before they tanked on a negative FDA decision. ImClone was trading higher by 10.4% at $9.68.

Nestle

announced that it will merge its ice cream business with

Dreyer's Grand Ice Cream

(DRYR)

, boosting its stake in the nation's No. 1 ice cream maker to 67%. Dreyer's shares jumped 56.9% to $67.29.

Atop today's thin earnings lineup was

Accredo Health

(ACDO)

, a provider of contract pharmacy services, which upped its full-year revenue and earnings forecast to account for an acquisition that closed mid-month. Accredo's shares were rising 7.3% to $54.88

The 10-year Treasury note was down 14/32 to 100 5/32, yielding 4.85%.

Overseas, stocks were mixed with London's FTSE 100 gaining 2.7% to 4757 and Germany's Xetra DAX up 3.9% at 4471. Japan's Nikkei 225 fell 2.4% to 10,664, and Hong Kong's Hang Seng closed down 1.1% to 10,832.