Dow soars over 200 - into record territory

NEW YORK (CNNMoney.com) -- The Dow surged more than 200 points into record territory Thursday, climbing above 13,700 for the first time, as investors embraced Rio Tinto's $38 billion deal to buy Alcan and some strong sales results from the nation's retailers.

The Dow (up 209.15 to 13,787.02, Charts) jumped by as much as 216 points and was trading up about 1.6 percent with about an hour remaining in the session. The 30-stock index hit a new high of 13,793.69 during the session, breaking the previous record of 13,692 set June 1.

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The Dow was also trading above its record closing high of 13,676.32, set on June 4.

The broader S&P 500 (up 19.50 to 1,538.26, Charts) flirted with record territory, climbing within a point of its closing high, but was over 1.3 percent higher.

The tech-laden Nasdaq (up 36.73 to 2,688.52, Charts) soared about 1.4 percent.

Stocks got a lift from merger activity Thursday as mining giant Rio Tinto (down $6.42 to $318.00, Charts) said it agreed to buy Alcan in a deal valued at $38.1 billion that would create the world's largest aluminum producer and thwart Alcoa's hostile bid for the Canadian company.

Alcan (up $8.74 to $98.34, Charts) shares jumped nearly 10 percent on the New York Stock Exchange. Alcoa (up $2.64 to $45.07, Charts, Fortune 500) stock also jumped - it was the biggest gainer in the Dow, up over 6 percent - on bets that it may too get bought out.

In other takeover news, Apollo Management's Hexion Specialty Chemicals said it agreed to buy chemical maker Huntsman in an all-cash deal worth $6.5 billion. Huntsman (down $1.18 to $26.39, Charts, Fortune 500) shares, however, fell over 4 percent on the New York Stock Exchange.

"There are investors such as ourselves who have been on sidelines for a while and they are taking this as an opportunity to play catch up," said Hugh Moore, founder and partner at Guerite Advisors.

But some better than expected retail sales readings for June provided a big boost for stocks as the consensus on Wall Street was the numbers would disappoint.

"Consumer are still spending so that was something for people to hang their hats on," said Moore.

Wal-Mart delivered some impressive results, reporting that same-store sales rose 2.4 percent, almost three times higher than forecasts. Wal-Mart (up $1.14 to $48.82, Charts, Fortune 500) shares climbed over 2 percent on the news.

American Eagle Outfitters (Charts) shares jumped 6.7 percent after the teen clothing retailer posted a strong 8 percent jump in its June sales, beating expectations for a 4.4 percent gain.

Macy's (down $1.41 to $39.00, Charts) said its sales fell more than expected by 2.7 percent in June, sending its shares 3.5 percent lower.

The S&P Retail Index climbed nearly 1.9 percent.

On the economic front, the trade gap widened in May, meeting economists expectations, with much of the rising gap due to oil prices.

Weekly jobless claims fell more than expected to 308,000 last week, the Labor Department reported.

Treasury prices eased, taking the yield on the 10-year note to 5.11 percent from the 5.09 percent level reached late Wednesday.

The dollar eased slightly against the euro after sliding to record lows in the previous two sessions. The dollar edged higher versus the yen.

Oil prices retreated as U.S. light crude for August fell 6 cents to $72.50 a barrel on the New York Mercantile Exchange.

COMEX gold for August climbed $6.20 to $668.30.

Market breadth was positive. Advancers topped decliners on the New York Stock exchange by nearly 2 to 1 on volume of 1.13 billion shares. Winners beat losers on the Nasdaq by more than 2 to 1 on volume of 1.57 billion shares.