Stock rally accelerates

Dow jumps 100 as investors welcome deals, await Fed policy meeting later this week.

March 19 2007: 11:11 AM EDT

NEW YORK (CNNMoney.com) -- The stock market rally picked up steam Monday morning as investors welcomed a bevy of corporate deals and geared up for the start of the two-day Federal Reserve policy meeting.

The Dow Jones industrial average (up 85.48 to 12,195.89, Charts), the broader S&P 500 (up 12.78 to 1,399.73, Charts) index and the Nasdaq (up 21.02 to 2,393.68, Charts) all gained close to 1 percent about 90 minutes into the session.

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.

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European bank Barclays (up $0.44 to $53.94, Charts) is reportedly in early talks with Dutch rival ABN Amro (up $3.25 to $39.49, Charts) about a possible merger, with an announcement about the status of any deal expected before the start of trading Tuesday.

Energy company TXU (up $0.67 to $63.42, 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 (up $0.00 to $36.80, Charts) said it is buying Triad Hospitals (up $0.00 to $49.36, 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 $2.35 to $24.22, Charts) said it is buying larger rival Todco (up $5.73 to $38.51, 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 $1.05 to $21.90, Charts) jumped after the video game publisher said it was considering putting itself up for sale.

Blue-chip gains were broad, with 28 out of 30 Dow components rising, led by Caterpillar (up $0.97 to $64.13, Charts), Microsoft (up $0.34 to $27.67, Charts), Exxon Mobil (up $0.84 to $70.70, Charts) and Walt Disney (up $0.40 to $34.01, Charts).

Market breadth was positive. On the New York Stock Exchange, winners beat losers four to one on volume of 380 million shares. On the Nasdaq, advancers topped decliners by more than two to one on volume of 510 million shares.

The Fed has its own March Madness

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)

Treasury prices slipped, raising the yield on the 10-year note to about 4.57 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 11 cents to $57 a barrel on the New York Mercantile Exchange.

COMEX gold rose 30 cents to $654.20 an ounce.

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