US stocks rallied on Monday, helped by a raft of deals, including Alcatel's take-over of Lucent Technologies Inc.
The Standard & Poor's 500 charged close to a fresh 5-year high as stocks got off to a strong start in the second quarter. Expectations for robust first-quarter earnings fuelled buying of mega-cap stocks like heavy equipment maker Caterpillar Inc and diversified manufacturer 3M Co, while a sharp rise in crude oil prices drove up shares of major oil companies like Exxon Mobil Corp and ConocoPhillips.
"People are really optimistic about first-quarter earnings numbers. Consensus is also that large-cap stocks are what's going to move this market and they are strong today," said Michael McDonald, vice president of sales trading at Canaccord Adams.
The Dow Jones industrial average was up 117.42 points, or 1.06 percent, at 11,226.74. The Standard & Poor's 500 Index was up 12.07 points, or 0.93 percent, at 1,306.90. The Nasdaq Composite Index was up 11.31 points, or 0.48 percent, at 2,351.10.
Earnings of Standard & Poor's 500 index companies are forecast to have risen about 11 percent in the first quarter, according to Reuters Estimates.
Caterpillar, the Dow's biggest gainer, was up 5 percent at $75.33 on the New York Stock Exchange.
France's Alcatel said it would pay $13.4 billion for Lucent, the rival US telecommunications equipment-maker. Alcatel's US-listed stock jumped almost 6 percent to $16.28. Lucent's stock rose 1.6 percent to $3.10.
Merger and acquisition activity signals confidence among corporate executives about the current value of companies and can whet investors' appetite for stocks.
Blue chip Verizon Communications Inc on Monday said it will sell its Caribbean and Latin American telecom operations in three transactions for $3.7 billion. Verizon was up 1.4 percent at $34.52.
The benchmark 10-year Treasury note's yield climbed to 4.876 percent, but was off its earlier high of 4.907 percent - the highest since June 2002. Stocks ended their strongest first quarter in at least six years on Friday.
General Motors Corp unveiled a $14 billion deal to sell a controlling stake in General Motors Acceptance Corp, its finance arm. GM's stock, a Dow component, fell 2.6 percent to $20.71 after GM forecast the move would result in a quarterly charge of up to $1.3 billion.
An index of oil stocks rose 1.8 percent, its biggest one-day percentage gain in three months. With more than one-fifth of Nigerian oil output shut by rebel attacks, US May crude oil rose 87 cents to $67.50 a barrel.
Exxon Mobil shares rose 1.2 percent to $61.59. On Nasdaq, shares of Microsoft Corp gained 1.6 percent to $27.64.
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