Mergers, earnings magic for stocks

NEW YORK (CNNMoney.com) -- Dealmaking activity on Wall Street that included a merger in the offshore drilling sector and surprisingly strong results from drugmaker Merck, helped send stocks higher Monday.

The Dow Jones industrial average (up 69.66 to 13,920.74, Charts) climbed nearly 0.5 percent in early trading.

The broader S&P 500 (up 7.31 to 1,541.41, Charts) moved over 0.4 percent higher, while the tech-fueled Nasdaq (up 6.00 to 2,693.60, Charts) rose over 0.2 percent.

Stocks got a lift following some dealmaking activity that included an announcement early Monday by offshore drilling firms Transocean (up $6.28 to $116.25, Charts) and rival GlobalSantaFe (up $4.14 to $78.88, Charts) that they agreed to a merger, giving the companies a combined market capitalization of about $48 billion.

Shares of the two companies both climbed nearly 6 percent in morning trade on the New York Stock Exchange.

Private equity firm Cerberus Capital Management also announced a $4 billion deal for the equipment rental company United Rental (up $0.69 to $33.06, Charts), representing a 6.6 percent premium to the company's Friday closing price.

Better than expected earnings from drugmakers Merck and Schering-Plough (up $0.39 to $31.88, Charts, Fortune 500) and energy services firm Haliburton (up $0.66 to $37.23, Charts, Fortune 500) also provided support to stocks in a session with no major economic reports on tap.

Dow component Merck (up $3.17 to $52.19, Charts, Fortune 500) shares jumped 6.6 percent after the company reported a 12 percent increase in profits and raised its 2007 earnings forecast.

Stocks retreated Friday, with the 30-stock Dow falling nearly 150-points hurt by more troubling news from the housing sector and some weak corporate results.

In other corporate news, British bank Barclays (up $1.79 to $60.42, Charts) sweetened its takeover offer for ABN Amro (up $0.11 to $50.95, Charts) to $93 billion, although the new offer still falls short of the bid from a rival group led by Royal Bank of Scotland.

Netflix (down $2.23 to $17.40, Charts) shares tumbled over 11 percent after the video rental company cut prices Sunday on two of its subscription plans by $1. Netflix is scheduled to report earnings after the bell Monday.

Other earnings due after the bell include Dow component American Express (up $0.42 to $64.93, Charts, Fortune 500), as well as tech bellwether Texas Instruments (up $0.55 to $38.56, Charts, Fortune 500).

Oil prices fell sharply, as U.S. light crude for September lost $1.01 to $74.78 a barrel on the New York Mercantile Exchange.

Treasury prices was little changed, leaving the yield on the 10-year note at 4.95 percent, the same level reached late Friday. Bond prices and yields move in opposite directions.

COMEX gold for August fell $1.60 to $683.10 an ounce.

Major Asian markets finished the session lower Monday, while European stocks got off to a mixed start. The dollar was stronger against the euro and the yen.