The Dow Jones industrial average gained 52.45 points, or 0.40 percent, to close at 13,264.49. The Standard & Poor's 500 was up 10.42 points, or 0.74 percent, to 1,418.89. The Nasdaq Composite Index advanced 28.13 points, or 0.91 percent, to 3,119.70.
The Institute of Supply Management's index on U.S. manufacturing activity rose to 53.4 in March from 52.4 in February, a little better than some analysts expected, suggesting that the U. S. manufacturing activities continued to expand.
Meanwhile, China's official Purchasing Managers Index (PMI) jumped to an 11-month high of 53.1 in March, up from February's 51, indicating the world's second largest economy's manufacturing sector also accelerated.
The upbeat manufacturing data helped ease investors' concerns about the global economic slowdown and lifted the market. All ten sectors of S&P 500 logged gains, led by material and tech sectors.
The financial sectors also gained broadly on Monday as UBS raised price targets of major banks. Bank of America, JP Morgan, Goldman Sachs and other large financial institutions saw their stock prices advanced.
However, the economic situation in euro zone remains a concern for investors and limited Monday's gains. The euro zone's unemployment rate climbed to a euro-era high of 10.8 percent in February from 10.7 percent in the previous month.
Also, the euro zone's manufacturing activities shrank for eight consecutive month as its PMI for March dipped to 47.7 from 49.0 in February.
On other markets, Oil prices rose 2 percent to close above 105 dollar a barrel as loading delays for North Sea crude cargoes added supply disruption concerns. The dollar dropped as risk- aversion appetite faded. Gold price traded around 1680 dollars per ounce on a falling dollar and rising equity market.