US stocks closed higher, rebounding from the previous session's steep sell-off, as investors digested the latest key economic data.

On Monday, the Dow Jones Industrial Average increased 143.78 points, or 0.51 per cent, to 28,399.81. The S&P 500 was up 23.40 points, or 0.73 per cent, to 3,248.92. The Nasdaq Composite Index was up 122.47 points, or 1.34 per cent, to 9,273.40.

The majority of the 30 Dow component companies traded higher, with Nike and Microsoft gaining 3.08 per cent and 2.44 per cent, respectively, leading the advancers.

Eight of the 11 primary S&P 500 sectors traded in green territory, with materials adding 2.13 per cent, leading the gainers.

On the data front, the Institute for Supply Management (ISM) said on Monday that the January purchasing managers' index (PMI) registered 50.9 per cent, an increase of 3.1 percentage points from the previous month's reading.

"Global trade remains a cross-industry issue, but many respondents were positive for the first time in several months," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.