The sales bump matched the 1.2 percent increase a month earlier and beat economists' expectations, which called for a 0.8 percent gain in September.
A mid-month report on New York State manufacturing indicated business activity fell in the state for the third consecutive month, but at a slower decline than September. The New York Federal Reserve's diffuse index of business activity rose four points to minus 6.2.
After posting losses in four of five sessions last week, the Dow Jones industrial average gained 95.38 points, 0.72 percent to 13,442.23. The Nasdaq composite index, added 20.07 points, 0.66 percent, to 3,064.18. The Standard and Poor's 500 index added 11.54 points or 0.81 percent to 1,440.13.
On the New York Stock Exchange, 2,030 stocks advanced and 1,007 declined on a volume of 3.4 billion shares traded.
The benchmark 10-year treasury note was yielding 1.662 percent.
The euro fell to $1.2952 from Friday's $1.2953. Against the yen, the dollar rose to 78.72 yen from 78.44 yen.
In Japan, the Nikkei 225 index added 0.51 percent, 43.81 points, to 8,577.93.
In London, the FTSE 100 index gained 0.21 percent, 12.29, to 5,805.61.