NEW YORK (TheStreet) -- Stocks extended gains by midafternoon Monday ahead of the Federal Reserve's two-day policy meeting that begins Tuesday.

The S&P 500 was up 1.3%, the Dow Jones Industrial Average climbed 1.3%, or 233 points, and the Nasdaq added 1.1%.

Wall Street has been increasingly volatile over the past week as investors debated the likelihood the central bank would hike rates as soon as June.

"I do understand that the first Fed hike is not intended to tighten financial conditions; it is just meant to move off of emergency policy measures," said RBS strategist Tyler Tucci. "However, given the current global macroeconomic landscape, it might be best to err on the side of patience, whether it is in the FOMC statement or not."

Crude oil plummeted to six-year lows on Monday, though recovered a level above $43 a barrel after dipping to just over $42 earlier in the session. By midafternoon, West Texas Intermediate was down 2.8% to $43.60 a barrel. The fresh lows added to losses suffered last week as rig cuts only dented production and the U.S. faces a possible storage crisis in coming months.

"Selling pressure was generated on Friday by the International Energy Agency, which warned that storage capacities could soon be exhausted in the U.S.," said Commerzbank analysts in a note. "The IEA only expects the situation to improve in the second half of 2015 when growth in U.S. oil production looks set to slow."

Procter & Gamble (PG) led the Dow higher, spiking 2.1% after Bloomberg reported the company was exploring a sale or spinoff of its beauty brands. Plans are reportedly still in the early stages, including which brands would be spun off.

Health care was the best performing sector in Monday's broad-based rally, led by Salix Pharmaceuticals (SLXP) and Valeant Pharmaceuticals (VRX). Salix jumped 2% after it agreed to Valeant Pharmaceutical's bid of $173 a share. Valeant had previously offered to buy the gastrointestinal drugmaker for $158 a share. The Health Care SPDR ETF (XLV) climbed 2.2%. 

Several economic readings came in weaker than expected on Monday, including homebuilder confidence, which fell to its lowest point since July. The NAHB housing market index slipped to 53 in March, down from 53 a month earlier. Industrial production in February was also shy of estimates, climbing 0.1% and coming in below estimates of 0.2%. 

Candy Crush developer King Digital (KING) moved 2.7% higher after being upgraded to "overweight" from "neutral" at JPMorgan. The firm said the company can dwarf smaller competitors as its network grows and new game launches prove successful.

General Electric (GE) added 1.7% after agreeing to sell its Australia and New Zealand consumer-lending arm to a group of investors led by investment firm KKR & Co. for $6.3 billion.

Madison Square Garden (MSG) CEO Tad Smith announced he will leave his position to join Sotheby's (BID) as its CEO. Madison Square Garden shares fell 0.75% and Sotheby's shares climbed 1.1%.

Tesla (TSLA) spiked 3.6% after CEO Elon Musk announced a press conference for Thursday in which the alternative carmaker would unveil solutions to "range anxiety." In a tweet, Musk said the announcement would detail a software update for its Model S fleet that would allow the vehicles to drive longer distances between charges.

Netflix (NFLX) was downgraded to "sell" from "hold" at Evercore. Analysts said the video-streaming industry is becoming intensely competitive and poses a challenge to Netflix. Shares fell 3.8%.

Walt Disney (DIS) shares climbed 1% after live-action film Cinderella pulled in $132.5 million worldwide in its weekend debut, including $70.1 million domestically.