Wall Street's merger Monday rallyMajor gauges jump as investors welcome deal news, gear up for Fed policy meeting later this week.NEW YORK (CNNMoney.com) -- Stocks rallied Monday, with the Dow adding more than 100 points as investors jumped back into equities after last week's exodus, thanks to a slew of corporate deals. Investors were also gearing up for the start of the two-day Federal Reserve policy meeting, which begins Tuesday.  
The Dow Jones industrial average (up 115.76 to 12,226.17, Charts) and the Nasdaq (up 21.75 to 2,394.41, Charts) composite both gained just short of 1 percent, while the broader S&P 500 (up 15.11 to 1,402.06, Charts) index gained 1.1 percent. Treasury prices fell, raising the corresponding yields. The dollar gained versus other major currencies. In addition to the start of the Federal Reserve meeting, Tuesday brings reports on housing starts and building permits. After the close, it was announced that a court determined that a lower court judge was wrong to declare class-action status in a $40 billion lawsuit by Enron shareholders. (Full story). All three major gauges slumped Friday and lost more than 1 percent last week on mixed economic news and jitters ahead of this week's Fed meeting. But Monday, the tone was more positive, as investors welcomed a variety of deals and rumored deals. "I think we're seeing a recovery from the downer days we saw over the last few weeks," said Ron Kiddoo, chief investment officer at Cozad Asset Management. He said Monday's merger news was less of a driver of the advance than the desire of investors to get back into stocks at lower levels after the recent setback. European bank Barclays (down $0.15 to $53.35, Charts) said it is in exclusive early talks with Dutch rival ABN AMRO (up $5.12 to $41.36, Charts) about a possible merger, confirming earlier speculation. Energy company TXU (up $1.81 to $64.56, Charts), which agreed to be taken private in a record $32 billion deal last month, is reportedly being wooed by a rival private equity group, led by the Blackstone Group. In the hospital sector, Community Health Systems (down $2.02 to $34.78, Charts) said it is buying Triad Hospitals (up $2.36 to $51.72, Charts) for $5.1 billion in cash, ending an existing $4.5 billion deal for Triad to be taken private by a group of private equity funds. ServiceMaster (up $1.68 to $15.15, Charts), a lawn care service and pest control provider, has agreed to be taken private by an investment group in a deal worth $5.5 billion in cash and debt. Hercules Offshore (down $1.25 to $25.32, Charts) said it is buying larger rival Todco (up $6.46 to $39.24, Charts) in a $2.3 billion cash-and-stock deal that will unite the oil and gas drillers. And shares of Take-Two Interactive (up $1.76 to $22.61, Charts) jumped after the video game publisher said it was considering putting itself up for sale. Blue-chip gains were broad based, with 28 of 30 Dow components rising, led by AIG (up $0.99 to $67.86, Charts), Caterpillar (up $1.01 to $64.17, Charts), DuPont (up $0.90 to $50.86, Charts), Microsoft (up $0.50 to $27.83, Charts), AT&T (up $0.60 to $37.58, Charts), Exxon Mobil (up $1.24 to $71.10, Charts) and Walt Disney (up $0.48 to $34.09, Charts). Market breadth was positive. On the New York Stock Exchange, winners beat losers 3 to 1 on volume of 1.46 billion shares. On the Nasdaq, advancers topped decliners by nearly 2 to 1 on volume of 1.7 billion shares. Fed policy makers are meeting Tuesday and Wednesday, with a decision on interest rates expected Wednesday afternoon. The central bank is widely expected to keep interest rates steady at 5.25 percent for the sixth meeting in a row. But what the bankers say in the statement about the outlook for rates through the rest of the year will be closely watched by investors. (Full story) "Everyone knows what the Fed will do, which is nothing," said Kiddoo. However, he said that some investors may be betting that the central bank will tweak the language in the statement to suggest that they are likely to cut rates sooner than they are to raise them. Treasury prices slipped, raising the yield on the 10-year note to about 4.56 percent from 4.54 percent late Friday. Bond prices and yields move in opposite directions. In currency trading, the dollar rose versus the euro and the yen. U.S. light crude oil for April delivery fell 52 cents to settle at $56.59 a barrel on the New York Mercantile Exchange. COMEX gold rose 40 cents to settle at $654.30 an ounce. Subprime: the risk to Wall Street |
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