Stocks rose Monday, with the S&P 500 index erasing all of last week's loss, as companies announced $26.9 billion in global deals.
The Dow Jones industrial average closed up 213.88, or 1.9%, at 11,482.90; while the S&P 500 rose 25.68, or 2.18%, closing at 1,204.49. The S&P 500 lost 1.7% last week. The Nasdaq composite was up 47.22, or 1.88%, to close at 2,555.20. All numbers are preliminary.
The S&P 500 is up 7% since Aug. 10, its biggest three-day rally since March 2009, as valuations and the pickup in takeovers overshadowed more signs the economic recovery is slowing. The Federal Reserve Bank of New York's general economic index fell to -7.7 from -3.8 in July. A zero reading is the dividing line between expansion and contraction.
Global markets are stabilizing following a week of record swings in U.S. stocks after S&P cut the nation's credit rating. Motorola Mobility Holdings surged 56% to lead gains in the S&P 500 Monday after Google offered to buy the company for about $12.5 billion.
“M&A activity in general, and this is M&A with a capital M and a capital A, is generally synonymous with a relatively healthy economy and good things to come and a bull market,” Richard Weiss, a senior money manager at American Century Investments, said in a Bloomberg Television interview. His firm oversees about $108 billion. “Although it remains to be seen whether that's true, it's generally a positive.”
The MSCI ACWI climbed 1.9%, trading at 12.5 times earnings after reaching 11.8 on Aug. 10, the lowest since March 2009. Japan's Nikkei 225 average rallied 1.4% as the country's economy contracted less than economists estimated in the second quarter.
The yield on the 30-year Treasury bond climbed two basis points. Global demand for U.S. stocks, bonds and other financial assets weakened in June from a month earlier as the White House and Congress wrangled over raising the debt limit, government figures show.