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* U.S. manufacturing rebounds in January
* Google-parent Alphabet rises ahead of results
* Tesla shares soar after Panasonic battery report
* Gilead gains as drug to be tested to counter coronavirus
* Indexes up: Dow 0.5%, S&P 0.73%, Nasdaq 1.2% (Updates to mid afternoon)
By Lewis Krauskopf
Feb 3 (Reuters) - U.S. stocks rallied on Monday, helped by gains in heavyweight technology shares and surprise strength in U.S. manufacturing activity, as stocks rebounded after a sharp selloff last week sparked by concerns about fallout from a virus out of China.
U.S. factory activity unexpectedly rebounded in January after contracting for five straight months amid a surge in new orders, according to the Institute for Supply Management (ISM).
The data helped stocks recover after the S&P 500 last week suffered its biggest weekly percentage drop in about six months amid concerns the coronavirus spread could hurt economic growth.
“Investors are looking beyond the potential negative impacts of the coronavirus,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston. “Historically, these events have proven to be a buying opportunity for investors, and there could be an element of folks getting comfortable with where we are with the coronavirus moving forward.”
The Dow Jones Industrial Average rose 140.04 points, or 0.5%, to 28,396.07, the S&P 500 gained 23.5 points, or 0.73%, to 3,249.02 and the Nasdaq Composite added 109.97 points, or 1.2%, to 9,260.91.
Microsoft shares rose 2.0%, leading a 1.0% rise for the S&P 500 technology sector.
Shares of Google parent Alphabet gained 3.1% ahead of the company’s quarterly results due after the market close on Monday.
Ten of the 11 major S&P 500 sectors rose, with energy the lone group in negative territory as crude prices dropped.
Investors were eyeing a busy U.S. political week. Democrats in Iowa kicked off the party’s nominating process on Monday.
The U.S. Senate was due to vote on Wednesday on whether to remove President Trump from office following the impeachment process, although the Republican-controlled legislative body was expected to acquit him.
In company news, Tesla shares soared 16.0% as Panasonic Corp reported the first quarterly profit in its U.S. battery business with the electric vehicle maker.
Gilead Sciences Inc shares gained 5.6% after the drugmaker said it has provided its experimental Ebola therapy for use in a small number of patients with the coronavirus.
Nike shares rose 3.6% after JP Morgan added the stock to its focus list.
Fourth-quarter earnings season is about halfway done, with 228 S&P 500 companies having reported and with earnings expected to have climbed 1.1% in the period, according to IBES data from Refinitiv.
Advancing issues outnumbered declining ones on the NYSE by a 1.99-to-1 ratio; on Nasdaq, a 2.01-to-1 ratio favored advancers.
The S&P 500 posted 24 new 52-week highs and 9 new lows; the Nasdaq Composite recorded 54 new highs and 66 new lows. (Additional reporting by Medha Singh and Sruthi Sankar in Bengaluru; Editing by Arun Koyyur and Nick Zieminski)