The S&P 500 financial index rose 2.3 percent, leading gains among sectors.
Asian stocks pointed to gains after a positive Friday session on Wall Street as investors watched for developments in trade tensions between China and the US before earnings season gets underway later this week.
JPMorgan, Wells Fargo and Citigroup are scheduled to report results on Friday, kicking off the second-quarter earnings season in earnest. The dollar comes off the back of its worst week since May and Treasury yields steadied close to the low end of their recent range as investors dissected a mixed U.S.jobs report on Friday and the trade rift with China ramped up a notch.
The United States and China slapped tit-for-tat tariffs on $34 billion of each other's goods on Friday, escalating a months-long trade dispute between the two countries.
Helping to boost the Dow, Caterpillar Inc rose 4.1 percent.
A Bank of America Merrill Lynch Global Research report showed earnings per share for S&P 500 companies for 2018 was revised higher amid better-than-expected first-quarter results, higher oil prices and stronger-than-expected USA economic growth.
USA analysts' estimates for S&P 500 second-quarter profit growth have risen slightly since April, putting the latest forecast at around 21 percent, according to Thomson Reuters data.
The Dow Jones Industrial Average rose 314.81 points, or 1.29 percent, to 24,771.29, the S&P 500 gained 21.07 points, or 0.76 percent, to 2,780.89 and the Nasdaq Composite added 50.40 points, or 0.66 percent, to 7,738.79.
Twitter shares fell 5.3 per cent after it was reported the social media company suspended more than 70 million fake accounts, which analysts say will impact user growth.
The S&P 500 posted 21 new 52-week highs and no new lows; the Nasdaq Composite recorded 142 new highs and 30 new lows. China last week said it was retaliating over US tariffs and President Donald Trump threatened to impose levies on even more Chinese goods.