Updated from 4:08 p.m. EDT

Stocks ramped up in Monday's final hour of trading to post solid gains, after investors received a positive economic reading on the nation's service sector.

Extending the market's winning streak to three days, the Nasdaq led the way, closing up 21.94 points, or 1.07%, to 2079.11. The Dow closed up 87.78 points, or 0.84%, to 10,558.37; and the S&P 500 added 8.73 points, or 0.76%, to 1150.54.The 10-year Treasury note, which gave up about 2 points in price Friday, was recently down another 18/32 to yield 4.21%, while the dollar was stronger against the yen and euro.

Volume on the New York Stock Exchange approached 1.4 billion shares, and decliners outnumbered advancers by about 5 to 4 despite the day's gains. On the Nasdaq, over 1.7 billion shares changed hands, and advancers outpaced decliners by about 3 to 2.

The Nasdaq has now moved to within a point of its Feb. 18 high of 2080.35.

"What's interesting is that we're overbought on a short-term basis by a lot of different measures, and you would expect in that situation that you would get some kind of pullback or consolidation," said John Hughes, equity strategist at Shields & Co. "The fact that we ramped up here before the bell suggests that there may be some strength here, and we may not get much of a pullback here."

The Institute of Supply Management's services index beat Wall Street's expectations, rising to 65.8 in March, up from 60.8 in February.

Richard Williams, equity strategist at Summit Analytic Partners, was impressed by the release, but he is waiting for the market to confirm its direction in the upcoming, first-quarter earnings season before he takes a strong position. "My theory is that this quarter may not be as good as people expect it to be," said Williams. "This is one of the most important earnings seasons we've seen in a long time, in part because of the election and in part because we've waited so long for the economy to kick in jobs and profits from companies. So now, this is where we'll either see it or we won't."

Michael Strauss, chief economist at Commonfund, is more optimistic. He expects year-over-year earnings growth of 20% for the first quarter. "One of the things that is helping to provide support to the equity market is the strength of the economy and the associated strength of earnings," said Strauss. "It's continuing to provide some very nice upside surprises to the equity market."

Overseas stocks were higher, with London's FTSE 100 closed up 0.3% to 4481, while Germany's Xetra DAX was up 1% to 4049. In Asia, Japan's Nikkei rose 1.2% to 11,958, while the Hang Seng in Hong Kong added 0.4% to 12,732.