Updated with Treasuries, stock and commodity prices.

Banks led the major indices more than 2% higher Monday as Wall Street prepared for an onset of second-quarter earnings.

The Dow Jones Industrial Average was up 184.16 points, or 2.3%, at 8331.68, while the S&P 500 tacked on 21.92 points, or 2.5%, to 901.05. The Nasdaq Composite gained 37.18 points, or 2.1%, to 1793.21.

Financials rallied, with the KBW Bank index rising 6.5% after Meredith Whitney Advisory Group upgraded Goldman Sachs ( GS) to buy. Bank of America ( BAC) and JPMorgan Chase ( JPM) rose 8.3% and 6.4%, respectively, on the Dow.

 Market Roundup

Stocks moved lower last week after discouraging data blurred the view of the economic recovery, but traders appeared optimistic Monday as a wave of quarterly reports approached.

The focus will not be necessarily on earnings, but sales and sales growth as well as corporate comments about the economic environment, wrote Paul Nolte, director of investments at Hinsdale Associates. "Further correction in stocks or a rebound should be answered by next weekend," he said, adding that "this week is likely to be a do or die week for stocks and we will act accordingly."

Jeffrey Saut, chief investment strategist at Raymond James, makes a case for not getting too bearish based on the pattern stocks followed in 2003. The S&P bottomed in March slightly below 800 and rallied into the third week of June, trading to slightly above 1000, says Saut. "And then we basically went sideways throughout the summer, and stocks re-energized in September of that year and put on about 15% to break out above the high," he says.

"The first leg of the rally was driven by liquidity, much like this one was, and the second leg was driven by improving fundamentals, which is what I think you're going to see as more of the stimulus effect takes hold," says Saut. "I would also point out that comparisons on an earnings basis are going to get pretty darn easy in the third and fourth quarters of this year, and I think the markets will be pointing to that."

(Click below to hear my entire conversation with Jeffrey Saut, chief investment strategist at Raymond James.)

Click to Listen
Market Q&A

In one of the first earnings releases of the week, Philips Electronics ( PHG) reported a 94% year-over-year decline in the second quarter, on a 19% drop in sales. But the biggest consumer electronics maker in Europe managed to beat estimates on an adjusted basis. Philips shares tacked on 7.1% to $19.51.

Reports from Novellus Systems ( NVLS) and CSX ( CSX) are due out after the market closes Monday. Those will be followed with reports from Goldman Sachs ( GS) and Johnson & Johnson ( JNJ) before Tuesday's open and Intel ( INTC) and YUM! Brands ( YUM) after Tuesday's close.

In other news, troubled commercial lender CIT Group ( CIT) said it is still in discussions regarding its participation in the Federal Deposit Insurance Corp.'s Temporary Liquidity Guarantee Program, and other liquidity solutions as it rushes to improve its near-term position. Shares slumped 11.8% to $1.35.

Also, Swiss banking giant UBS ( AIG) and the U.S. and Swiss governments have agreed to a 15-day suspension of litigation as they are reportedly negotiating a settlement related to the U.S. government's efforts to retrieve the identity of 52,000 U.S. account holders suspected of tax evasion. Shares rose 6.4% to $12.40.

Checking in on commodities, oil futures fell 20 cents to$59.69 a barrel after falling more than $1 earlier in the day. Gold added $10 to $922.50 an ounce.

The dollar was recently stronger against the yen, but weaker vs. the pound and euro. Longer-dated Treasuries were falling in price, rising in yield. The 10-year was losing 14/32, to yield 3.35%, while the 30-year gave up 23/32, yielding 4.24%.

Stocks overseas were mixed. In Europe, London's FTSE 100 and the DAX in Frankfurt rose 1.8% and 3.2%, respectively. In Asia, the Nikkei in Japan and Hang Seng in Hong Kong each fell 2.6%.