Deals let loose the bulls

NEW YORK (CNNMoney.com) -- Major deals for Sallie Mae and DoubleClick fueled a stock rally Monday as investors also digested a stronger-than-expected reading on March retail sales.

The Dow Jones industrial average (Charts) rose about 0.7 percent while the broader S&P 500 (Charts) gained 0.8 percent about 90 minutes into the session.

The tech-heavy Nasdaq composite (Charts) index climbed about 0.8 percent.

In economic news, retail sales rose a solid 0.7 percent in March after rising 0.5 percent in February, which was revised higher by the Census Bureau. Economists surveyed by Briefing.com had forecast a 0.4 percent rise in March. Strength at gas stations and building supply stores fed the gains.

Elsewhere, in a speech in Tokyo that he delivered via satellite, former Fed chairman Alan Greenspan was quoted as saying the world economy would provide a cushion to a possible slowdown in the United States, as he downplayed the risk to the economy from problems in subprime mortgages.

A number of mergers helped push the market higher.

Search engine leader Google (Charts) announced late Friday it had agreed to buy privately held DoubleClick, a top digital marketing services firm, for $3.1 billion in cash. Google also has agreed to sell advertising on all of the stations owned by Clear Channel Communications (Charts) beginning at the end of June, it said. Shares of Google rose 1.3 percent early Monday.

Student loan lender Sallie Mae (Charts) agreed to be purchased for $25 billion by a group including private equity firms as well as JP Morgan Chase (Charts) and Bank of America (Charts), the company announced early Monday, sending its stock soaring 18 percent.

Quest (Charts) agreed to buy diagnostic testing equipment company Ameripath for $1.23 billion in cash, with the intention of growing Quest's cancer-detection unit. Quest stock sank 5 percent..

In earnings news, Citigroup, the largest U.S. bank, said its first-quarter profit fell, hurt by a restructuring charge largely for the elimination of 17,000 jobs. But excluding an $871 million after-tax restructuring charge, the company posted a profit of $1.18 per share, which beat the average Wall Street estimate of $1.10, as compiled by Reuters Estimates.

Citigroup stock gained 3.2 percent on the news, giving JPMorgan Chase (Charts) and American Express (Charts) a boost.

Eli Lilly reported that profits fell 39 percent in the first quarter as special charges offset better sales of the company's medicines, but strong revenue drove the stock up 2 percent.

Fourth-largest U.S. bank Wachovia (Charts) said its first-quarter profit rose 33 percent, helped by commercial lending growth and acquisitions, sending shares up over 2 percent.

World's largest toy maker Mattel (Charts) posted a small first-quarter profit when analysts had expected a loss, as the company took charges due to audit settlements over foreign taxes, sending shares up 1.1 percent.

In other economic news, business inventories rose 0.3 percent in February, in line with expectations. But excluding automobiles, they advanced by 0.8 percent, the largest increase in 11 months.

New York state manufacturing activity rose slightly to 3.80 in April after hitting a nearly two-year low the prior month.

U.S. light crude oil for May turned lower, falling 83 cents to $62.80 a barrel on the New York Mercantile Exchange.

Treasury prices rose in early trading, taking the yield on the 10-year note to 4.75 percent from 4.76 percent late Friday. Bond prices and yields move in opposite directions.

Gold for June delivery rose $1 to 690.90.

In currency trading, the dollar fell against the euro and rose slightly against the yen.

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