Stocks climbed on Tuesday after mobile phone operator Cingular Wireless won a battle to buy rival AT&T Wireless and stoked investor hopes for a pickup in deal-making on Wall Street.
"There is a lot of M&A (merger and acquisition) interest in the market," said Arthur Hogan, chief market analyst at Jefferies & Co "It's a real testament that we believe the market and the economy are doing well. You don't do big deals when you think the market is going down."
The market reversed two sessions of declines.
The Dow Jones industrial average rose 73 points, or 0.69 percent, to 10,701. The broader Standard & Poor's 500 Index climbed 11 points, or 0.95 percent, to 1,157. The technology-focused Nasdaq Composite Index advanced 24 points, or 1.18 percent, to 2,078.
Cingular bid $41 billion in cash for AT&T Wireless and trumped Britain's cellphone titan Vodafone. AT&T Wireless surged $1.86, or 15.74 percent, to $13.68 and ranked as the most actively traded share on the New York Stock Exchange.
Other wireless telephone companies gained on the deal. Nextel Communications scrambled up $1.67, or 6.2 percent, to $28.78, while Sprint PCS Group climbed 76 cents, or 8.2 percent, to $9.98.
Entertainment conglomerate Walt Disney Co and cable operator Comcast Corp added to the merger chatter.
Disney said it unanimously rejected Comcast's unsolicited take-over bid as too low and endorsed Chief Executive and Chairman Michael Eisner and his strategy for the company.
A source close to Comcast later said the company is not interested in buying Disney at the entertainment conglomerates current stock price. Disney, a Dow component, trimmed earlier gains on the news, but was still up 12 cents at $27.04.
Banks joined in on the merger activity.
New York regional bank North Fork Bancorp agreed to buy cross-town rival GreenPoint Financial Corp for $6.3 billion in stock, creating one of New York City's biggest retail banks. North Fork added 4 cents to $43.79, while GreenPoint fell $1.08, or 2.3 percent, to $45.75.
National City Corp, the No 10 US bank, said it will buy Provident Financial Group Inc for about $2.1 billion in stock, combining two of Ohio's largest banks. National City fell 75 cents, or 2 percent, to $34.64, while Provident leaped $3.96, or 11.4 percent, to $38.79.
Data on the economy added to investors' optimism. The Federal Reserve reported that output at US factories, mines and utilities jumped in January as cold weather boosted natural gas and electricity demand.
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