Stocks gained on Monday, buoyed by Citigroup Inc, which said it plans to sell its insurance unit to MetLife Inc, and relief that elections in Iraq went off with less bloodshed than expected. Life insurer MetLife said it will buy Citigroup's Travellers Life and Annuity Co for $11.5 billion. Citigroup rose 1.6 percent to $49.13, while MetLife fell 32 cents to $39.62.
The Dow Jones industrial average was up 72.46 points, or 0.69 percent, at 10,499.66. The Standard & Poor's 500 Index was up 9.73 points, or 0.83 percent, at 1,181.09. The technology-laced Nasdaq Composite Index was up 25.89 points, or 1.27 percent, at 2,061.72.
Marsh & McLennan Cos. rose 4 percent to $32.37 after the company said it will pay $850 million to settle charges with the New York Attorney General's office that it conspired with insurers to rig bids. The settlement raised hopes the company could put the scandal behind it.
The Chicago Purchasing Management Index rose unexpectedly in January to 62.4, showing that business activity in the US Midwest expanded in January for the 21st straight month and at a faster rate than expected.
"The elections in Iraq and mergers are helping the market, and the Chicago PMI also looked pretty good," said Jay Finkel, Lord Abbett senior equity trader. Increased merger activity is seen as a sign of business leaders' confidence about the economy, traders said.
On Iraq, Finkel said, "Markets don't like uncertainty, and the elections went out better than most people expected them to."
The vote in Iraq on Sunday eased fears of disruption of oil exports, which helped to push crude prices lower.
Opec's decision over the weekend to leave its production unchanged also contributed to oil's fall. US light crude prices fell 43 cents to $46.75 a barrel.
In other merger action, SBC Communications Inc said it would buy AT&T Corp for about $16 billion. AT&T shares fell 3.3 percent to $19.06 as SBC's offer price came below the company's recent trading price.
In earnings news, Mattel Inc jumped nearly 6.4 percent to $19.53 after the No 1 toy maker said fourth-quarter earnings rose 33 percent.
Exxon Mobil Corp rose 1.3 percent to $51.93 after the world's largest publicly traded oil company reported the highest quarterly profit in its history, driven by lofty crude oil and natural gas prices.
Delta Air Lines, which rose 9.3 percent to $5.50, led a rally in airline stocks as Merrill Lynch raised its ratings on four US carriers, and oil prices slipped.
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