Updated from 4:07 p.m. EDT

Stocks posted their third major swing in four sessions Monday, rising sharply on solid drug company earnings, falling crude prices and optimism about President Bush's selection of Ben Bernanke as the next Fed chairman.

The Dow Jones Industrial Average shot up 169.78 points, or 1.66%, to 10,385, the best single-session point gain since April 21. The S&P 500 surged 19.79 points, or 1.61%, at 1199.38, while the Nasdaq Composite gained 33.62 points, or 1.61%, to 2115.83.

"The market has looking for some type of news to get moving, and today it was partly Bernanke and partly good earnings," said James Park, director of institutional trading with Rodman & Renshaw.

About 1.65 billion shares traded on the New York Stock Exchange, and volume on the Nasdaq was 1.58 billion shares. Advancers outpaced decliners 3 to 1.

In other markets, the 10-year Treasury was down 15/32 in price to yield 4.45%. Analysts were encouraged that stocks found buyers after two swings of greater than 130 points on the Dow last week.

"We're seeing a lot of volatility the closer we get to support levels," said Barry Hyman, equity market strategist with Ehrenkrantz King Nussbaum. "We may have a near-term bottom if the support holds."

The markets opened strong and moved higher after President Bush nominated economic adviser and former Fed governor Bernanke to replace Alan Greenspan as the central bank's chief. Bernanke said policy continuity would be his first priority and was welcomed as an economic moderate who might be slightly less aggressive about inflation than Greenspan.

Hyman said the nomination takes "some indecision out of the equation. Getting this done earlier rather than later is a smart move. People are thinking Greenspan's replacement won't continue to raise interest rates. Hopefully it'll be a seamless transition in January."

Looking at the sectors, gains were widespread. Homebuilders, computer networkers, retailers, transports and oil stocks were among the leaders.

Meanwhile, Hurricane Wilma blew ashore near Marco Island, Fla., with sustained winds of about 125 mph. The Category 2 hurricane is expected to pass quickly over the Florida peninsula without significant deterioration before tracking up the East Coast toward New England.

Crude for December delivery finished down 31 cents to $60.32 a barrel, as traders concluded that the storm would have a bigger impact on energy demand than supply. Front-month crude lost about 4% last week as forecasters said Wilma was unlikely to strike key Gulf Coast energy infrastructure.

"There's a lot of concern about Wilma, but once again we're one step closer to finality," said Park. "The storm has blown through Florida, and we're ready to start assessing the damage. Commodities are all tied in with this."

Stocks are coming off a wild week in which the Dow twice swung more than 130 points and ended up losing 0.7% over the five sessions. The S&P 500 fell 0.6%, and the Nasdaq gained 0.8%.

Besides contending with oil, the market was blown around by earnings, a catalyst that remained in place Monday with reports from Merck ( MRK), American Express ( AXP), Texas Instruments ( TXN) and Reebok ( RBK).

"It's another quiet day on the economic news front but plenty of earnings releases to keep people busy," said Ken Tower, chief market strategist with CyberTrader. "The market's ability to push through and make new highs will demonstrate strength that could last all week."

Dow component Merck posted third-quarter earnings of $1.42 billion, or 65 cents a share, up from $1.33 billion, or 60 cents a share, a year earlier. Sales were down 2% to $5.42 billion mostly due to the withdrawal of Vioxx. The Thomson First Call consensus was for earnings of 62 cents a share on revenue of $5.45 billion.

Going forward, Merck predicted full-year earnings in a range of $2.47 to $2.51 a share, excluding items. Analysts are expecting EPS of $2.49, according to Thomson First Call. Merck gained 82 cents, or 3.1%, to close at $27.

Schering-Plough ( SGP) reported third-quarter earnings of $65 million, or 3 cents a share, in the quarter, compared with $26 million, or 1 cent a share, a year ago. The company's earnings were stronger because of benefits from a turnaround program and sales of anti-cholesterol drugs.

Before items, Schering-Plough earned 8 cents a share. Analysts expected EPS of 6 cents, according to Thomson First Call. Schering-Plough added 2 cents, or 0.1%, to $21.13.

American Express finished higher after the company posted third-quarter earnings of $1.03 billion, or 82 cents a share, up from $879 million, or 69 cents a share, a year ago. Earnings from continuing operations were 69 cents a share. Revenue climbed 11% to $6.07 billion. The Thomson First Call consensus was for EPS of 68 cents. The stock was up $2.39, or 5.1%, to finish $49.54.

Reebok posted third-quarter earnings of $117.7 million, or $1.87 a share, up from $81.8 million, or $1.34 a share, a year ago. Results included a gain from the sale of Ralph Lauren footwear. Sales fell to $1.04 billion from $1.16 billion a year ago. The Thomson First Call consensus was for earnings of $1.32 a share on sales of $1.15 billion.

Reebok said it expects fourth-quarter earnings in a range of 55 cents to 65 cents a share, below the consensus of 63 cents a share. The stock fell 21 cents, or 0.4%, to $57.21.

Kimberly-Clark ( KMB) posted a third-quarter profit of $325.3 million, or 68 cents a share, down from $441.3 million, or 89 cents, a year earlier. Excluding charges, earnings reached 95 cents a share on revenue rose to $4 billion. The Thomson First Call consensus was for earnings of 95 cents a share on revenue of $3.99 billion.

For the fourth quarter, the company expects earnings before charges in a range of 94 to 96 cents a share, below the Thomson First Call consensus of 97 cents a share. Shares of Kimberly-Clark rose $1.31, or 2.3%, to $58.13.

Cendant ( CD) announced a plan to divide in four, using spinoffs to create separate companies for real estate, travel services, hotels and car rentals. The conglomerate says the actions will simplify its financial reporting and unlock value in its constituent parts. Shares of Cendant dropped $1.32, or 6.6%, to $18.77.

Spain's Santander bank reportedly is in advanced talks to buy a stake in Sovereign Bancorp ( SOV), the Philadelphia lender. According to the Wall Street Journal, Sovereign will turn around and use the fresh cash to buy Independence Community Bank ( ICBC), based in New York.

Elsewhere, Morgan Stanley ( MWD) will buy AMLI Residential Properties Trust ( AML). The deal values the REIT at $37.75 a share, or a 21% premium over its closing price on Friday. AMLI was up $6.25, or 20%, to close at $37.52. Morgan Stanley gained $1.30, or 2.5%, to $53.40.

Among ratings moves, Jefferies upgraded Taser International ( TASR) to buy from hold, citing an expected boost in revenue from new customers. Shares of Taser added $1.06, or 19.4%, to $6.52.

Overseas markets were mixed Monday, with London's FTSE 100 up 1.3% to 5208 and Germany's Xetra DAX adding 1.3% to 4901. In Asia, Japan's Nikkei lost 0.7% overnight to 13,106, while Hong Kong's Hang Seng fell 0.6% to 14,402.

More from Markets

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices

Dow Rises for First Time in 9 Days, Oil Soars as OPEC Agrees to Boost Output

Dow Rises for First Time in 9 Days, Oil Soars as OPEC Agrees to Boost Output

Jim Cramer: Some Industrials Stocks Are Becoming Great Values

Jim Cramer: Some Industrials Stocks Are Becoming Great Values

Jim Cramer Reacts to Toni Sacconaghi's Latest Tesla Note

Jim Cramer Reacts to Toni Sacconaghi's Latest Tesla Note

Howard Schultz to Jim Cramer: Starbucks Stock Is Cheap and Undervalued

Howard Schultz to Jim Cramer: Starbucks Stock Is Cheap and Undervalued