Stocks extended gains Monday afternoon as the health care sector rallied. 

The S&P 500 gained 1%, the Dow Jones Industrial Average was up 0.7%, and the Nasdaq rose 1.4%.

Health care stocks led markets higher after Shire (SHPG) - Get Report agreed to acquire Dyax (DYAX)  for $37.30 a share, or $5.9 billion, a 35.5% premium to Dyax's Friday close. The deal gives Shire access to Dyax's experimental drugs to treat inflammatory diseases that hamper breathing.

Major drugmakers including Johnson & Johnson (JNJ) - Get Report , Novartis (NVS) - Get Report , Merck (MRK) - Get Report , Gilead Sciences (GILD) - Get Report , Pfizer (PFE) - Get Report and Amgen (AMGN) - Get Report rose, while the Health Care SPDR ETF (XLV) - Get Report added 1.9%. 

Hewlett-Packard officially became two companies on the New York Stock Exchange after a long process of separation. Hewlett Packard Enterprise "HPE," led by Meg Whitman, contains the data storage and servers business, while HP Inc. (HPQ) - Get Report consists of its PC and printers units. Investors bet on the PC business, pushing the newly-separated HP Inc. 13% higher, while HPE slid more than 1%.

Visa (V) - Get Report dropped by more than 3% after announcing a deal to acquire Visa Europe in an agreement worth 21.2 billion euros ($23.4 billion). The credit card giant also posted earnings that missed fourth-quarter estimates.

Chipotle (CMG) - Get Report shares fell 1.7% after the company shut 43 restaurants in Oregon and Washington as investigations into an E.Coli outbreak continue. As of Saturday, there have been three cases in Oregon and 19 in Washington have been reported.

Sprint (S) - Get Report announced plans to cut fiscal 2016 costs by up to $2.5 billion as part of its turnaround efforts. The telecom will likely look to job cuts and cost controls to reduce its expenditure by 10%. The company would not disclose how many layoffs are to expected. Sprint shares climbed 2.5%.

Estee Lauder (EL) - Get Report climbed 7.3% after reporting strong quarterly sales across its category and geographic portfolio. On a constant-currency basis, sales jumped 15%, led by a 14% increase in the Americas. Makeup sales climbed 14%, while skin care revenue increased 2%.

Clorox (CLX) - Get Report jumped 2.4% after reporting a better-than-expected first quarter. Adjusted profit of $1.32 a share beat estimates by 14 cents, while revenue climbed 3% to $1.39 billion. Sales rose 6% after stripping out the effects of a stronger dollar.

Manufacturing growth in the U.S. remained sluggish in October, hovering at its lowest level since May 2013, according to the latest Institute for Supply Management index print. Factory activity fell to 50.1 from 50.2 in September, in line with estimates. The measure has fallen for four straight months.

Meanwhile, U.S. construction spending rose to its highest level in seven-and-a-half years in September, an increase that could boost the next revision of third-quarter GDP. Spending increased 0.6% to $1.09 trillion, its highest point since early 2008, according to the Commerce Department.