U.S. stocks rallied in the first session of the New Year on Monday, after data showed the manufacturing sector grew for the fifth straight month and a brokerage upgrade of Intel helped lift semiconductor stocks.

The Institute for Supply Management said its index of national factory activity rose to 55.9 in December, its highest level since April 2006 and above forecasts for a reading of 54.3. A reading above 50 indicates expansion.

It's just another piece confirming we are in a recovery stage, said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

So far the market is responding to the positive data points we are getting. The issue that we have is, 'When does the recovery peter out and maybe not live up to expectations?'

The Dow Jones industrial average <.DJI> gained 161.12 points, or 1.55 percent, to 10,589.17. The Standard & Poor's 500 Index <.SPX> climbed 18.01 points, or 1.62 percent, to 1,133.11. The Nasdaq Composite Index <.IXIC> advanced 40.02 points, or 1.76 percent, to 2,309.17.

Energy stocks gained as U.S. crude oil futures advanced 2.5 percent, or $1.99, to $81.35 per barrel on concerns over a supply dispute between Russia and Belarus, as well as in reaction to exceptionally cold weather in the United States and a weaker dollar. [ID:nLDE6031P9] Earlier in the session, oil futures rose as high as $81.68, the highest level in more than two months.

The greenback shed 0.5 percent against a basket of six other major currencies <.DXY>.

Oil-related companies' shares also got a boost from an upgrade of the U.S. refining sector by Deutsche Bank, which raised its rating on several refiners, including Valero Energy Corp and Sunoco Inc .

Valero Energy jumped 4.8 percent to $17.56 and Sunoco advanced 4.7 percent to $27.32. The PHLX Oil Service index <.OSX> climbed 3.5 percent.

The Philadelphia semiconductor index <.SOXX> jumped 2 percent after Robert W. Baird upgraded Intel Corp to outperform on expectations for a rebound in corporate PC spending. Shares of chipmaker Intel, a Dow component and one of the Nasdaq's bellwether stocks, climbed 2.7 percent to $20.94 in Nasdaq trading.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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