Stocks strike back

NEW YORK (CNNMoney.com) -- Stocks surged Monday, as the market finally found momentum after a tough session in which worries about the subprime lenders overshadowed deals news and lower oil prices.

The tech-heavy Nasdaq (up 14.74 to 2,402.29, Charts) composite gained 0.6 percent. The Dow Jones industrial average (up 42.30 to 12,318.62, Charts) and the broader S&P 500 (up 3.75 to 1,406.60, Charts) index both gained around 0.3 percent.

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Stocks rose last week, as investors recovered a bit from the previous week's steep sell-off. Following that advance, stocks struggled Monday, with the focus on the subprime lenders. But trade improved by the afternoon.

"We're doing OK here," said Donald Selkin, director of research at Joseph Stevens. "It's higher, but it's not running away on the upside."

He said that after the big sell-off two weeks ago there were a lot of bearish predictions about how stocks would see a much bigger decline for several weeks. But that hasn't really happened, and now the market is trying to move beyond all of that.

Technology led the advance, with semiconductors particularly upbeat as investors showed optimism ahead of Texas Instruments (Charts)' mid-quarter update, which was released after the close.

However, the update was pretty mild, with the company narrowing its previous forecast range for both revenue and earnings per share but keeping the midpoint unchanged. TI shares slipped in extended-hours trading.

The week is a busy one, with reports due on retail sales, producer and consumer prices and manufacturing, among others.

Stocks are apt to be volatile for the next few days, said Peter Cardillo, chief market economist at Avalon Partners, because of ongoing concerns about subprime and because Friday is a quadruple-witching day. The quarterly event in which stock futures and options and stock index futures and options all expire simultaneously can cause gyrations in the underlying issues.

"Basically, we're in a holding pattern right now with the market trying to consolidate as we get near the end of the quarter," Cardillo said.

A number of chip stocks rose ahead of TI's update, including Intel (up $0.38 to $19.48, Charts) and Applied Materials (up $0.24 to $18.57, Charts).

The Philadelphia Semiconductor (up 4.25 to 479.30, Charts) index, or the SOX, rose 0.8 percent.

A number of other large technology stocks advanced as well, including Apple (up $1.90 to $89.87, Charts), Oracle (up $0.44 to $17.07, Charts) and Yahoo! (up $0.87 to $29.99, Charts).

Earlier in the session, stocks had stalled, staying close to unchanged as investors dealt with worries about subprime mortgage lenders. Although the broader market recovered, the finance sector remained under water.

New Century Financial (Charts) said its lenders have cut off its financing, in the latest blow to the mortgage lender to people with less than top credit. The New York Stock Exchange delayed opening trading for the stock and later announced that it was considering suspending trading.

When the stock finally opened late in the session, it lost nearly 50 percent of its value.

In addition, Countrywide Financial (down $0.96 to $35.14, Charts) said it expects some short-term earnings volatility owing to events in the subprime mortgage lending market, sending its shares lower.

Other financial companies exposed to subprime mortgage lending slumped as well including Accredited Home Lending (down $4.38 to $11.40, Charts), Fremont General (down $1.30 to $6.73, Charts) and Novastar Financial (down $1.00 to $4.24, Charts).

The day also brought a lot of merger and acquisition news.

Among the deals announced: Schering Plough (up $0.10 to $23.95, Charts) is buying Akzo Nobel's drug unit for $14.4 billion in cash.

Dollar General (up $4.29 to $21.07, Charts) has agreed to be taken private by Kohlberg Kravis Roberts & Co. in a $7.3 billion cash and debt deal.

UnitedHealth Group (up $0.27 to $53.27, Charts) said it was buying Sierra Health Services for $2.6 billion in cash.

In addition, Ford Motor (down $0.11 to $7.82, Charts) said it was selling its luxury Aston Martin line for $925 million.

Market breadth was positive. On the New York Stock Exchange, advancers beat decliners by almost 2 to 1 on volume of 1.47 billion shares. On the Nasdaq, winners topped losers 4 to 3 as nearly 1.61 billion shares traded hands.

U.S. light crude oil for April delivery fell 90 cents to settle at $59.15 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery fell $1.70 to $650.30 an ounce.

Treasury prices rose, lowering the yield on the 10-year note to 4.55 percent from 4.58 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell versus the yen and the euro.

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