NEW YORK (Reuters) -U.S. stocks gained for a second straight session on Monday as investors sought bargains after the Nasdaq and S&P 500's four-week tumble and assessed the latest economic data to gauge the impact of the Trump administration's policies.

Retail sales rebounded marginally in February, but fell short of expectations, reflecting the increasing uncertainty over tariffs and large-scale firing of federal government employees. A separate report showed March factory activity in New York State plummeted the most in nearly two years.

"The only signs of a bounceback in spending from January's weather-induced slump, and stocking up ahead of tariffs, was in online spending," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

"Sentiment is often a horrible predictor of spending, but the good vibes that have propped up spending are now a distant memory."

The Dow Jones Industrial Average rose 353.44 points, or 0.85%, to 41,841.63, the S&P 500 gained 36.18 points, or 0.64%, to 5,675.12 and the Nasdaq Composite gained 54.58 points, or 0.31%, to 17,808.66.

In addition, U.S. homebuilder sentiment dropped to a seven-month low in March as tariffs on imported materials raised construction costs.

When the Federal Reserve meets on Wednesday, it is widely expected to keep rates unchanged, according to CME's FedWatch Tool.

Fed officials will also announce economic projections with their policy statement, giving the most tangible evidence yet of how U.S. central bankers view the likely impact of Trump administration policies that have clouded a previously solid economic outlook.

The Federal Reserve Bank of Atlanta adjusted its forecast for first-quarter economic activity to show a 2.1% contraction, down from the March 7 estimate of a 1.6% contraction.

Stocks have tumbled in recent weeks, with the S&P 500 dropping last week by more than 10% from its February record high, a drop that defines a correction. The market rebounded on Friday as investors shopped for shares that may fare better under Trump's policies.

The blue-chip Dow index stood roughly 3% away from a correction after recent gains over the past two sessions, while the Nasdaq confirmed it was in correction territory on March 6.

Of the 11 major S&P sectors, real estate and energy led gains while consumer discretionary was the sole decliner.

Over the weekend, Treasury Secretary Scott Bessent warned in an interview there are "no guarantees" the United States will escape a recession.

Tesla stumbled 4.79% after brokerage Mizuho lowered its price target on the electric vehicle maker's stock to $430 from $515. The stock is down 41% on the year.

Quantum computing stocks such as D-Wave Quantum ( QBTS ) and Quantum Corp ( QMCO ) surged 10.15% and 40.09%, respectively, as artificial intelligence chipmaker Nvidia ( NVDA ) kicked off its annual conference.

Intel ( INTC ) shot up 6.82% after Reuters reported incoming CEO Lip-Bu Tan has considered significant changes to its chip manufacturing methods and AI strategies.

Advancing issues outnumbered decliners for a 4.44-to-1 ratio on the NYSE and a 2.47-to-1 ratio on the Nasdaq.

The S&P 500 posted nine new 52-week highs and one new low, while the Nasdaq Composite recorded 45 new highs and 111 new lows.

Volume on U.S. exchanges was 13.86 billion shares, compared with the 16.53 billion average for the full session over the last 20 trading days.

(Reporting by Chuck Mikolajczak; Editing by Richard Chang)