NEW YORK, New York - A correction in bond yields saw a surge in stocks Monday. The 10-year U.S. treasury which topped 4 percent last week, swooned to 3.65 percent Monday.

"It's pretty simple at this point, 10-year Treasury yield goes up, and equities likely remain under pressure," Raymond James' Tavis McCourt told CNBC Monday. "It comes down, and equities rally."

The Dow Jones industrials surged 765.38 points or 2.66 percent to 29,490.89.

The Tech-laden Nasdaq Composite gained 239.82 points or 2.27 percent to 10,815.43.

The Standard and Poor's 500 added 92.81 points or 2.59 percent to 3,678.43.

The U.S. dollar tumbled as yields eased. The euro shot up to 0.9822 by the New York close Monday. The British pound surged to 1.1318 after the UK government reversed an unpopular tax cut. The Japanese yen was a fraction higher at 144.66. The Swiss franc fell to 0.9927.

The Canadian dollar firmed to 1.3621. The Australian dollar rose to 0.6515. The New Zealand dollar was in demand at 0.5718.

On overseas equity markets, the FTSE 100 in London increased 0.22 percent. The CAC 40 in Paris, France, climbed 0.55 percent. The German Dax was up 0.79 percent.

Trading was thin on the Asian Pacific markets, with the Seoul stock exchange closed for its National Day, and New South Wales in Australia closed, although the ASX remained open with the main business being done out of Melbourne. China's Shanghai Composite was also out of action as China began Golden Week.

The Australian All Ordinaries dropped 22.30 points or 0.33 percent to close at 6,656.40 Monday. The market was nervous ahead of the Reserve Bank of Australia monthly meeting on Tuesday, at which the central bank is expected to hike interest rates another 50 basis points.

In New Zealand, the S&P/NZX 50 plummeted 106.26 points or 0.96 percent to 10,959.45.

Hong Kong's Hang Seng, ahead of a public holiday Tuesday, lost 143.32 points or 0.83 percent to 17,079.51.

In Japan, the Nikkei 225, going against the trend, surged 278.58 points or 1.07 percent to close Monday at 26,215.79.