Wall Street tries to sustain rally
Dow clings to 100-plus point gains, helped by dealmaking on Wall Street, strong Merck results.
NEW YORK (CNNMoney.com) -- Stocks remained near session highs Monday afternoon, with the Dow up more than 100 points, as Wall Street embraced a handful of deals and strong earnings from the drugmaker Merck.
The Dow Jones industrial average (up 114.05 to 13,965.13, Charts) soared by as much as 122 points and was over 0.7 percent higher with less than a hour remaining in the session.
Stocks moved higher after offshore drilling firms Transocean and rival GlobalSantaFe said Monday that they agreed to a merger, giving the companies a combined market capitalization of about $48 billion.
Private equity firm Cerberus Capital Management also announced a $4 billion deal for the equipment rental company United Rentals (up $0.67 to $33.04, Charts), representing a 6.6 percent premium to the company's Friday closing price.
Better than expected earnings from drugmakers Merck and Schering-Plough (down $0.07 to $31.42, Charts, Fortune 500) and energy services firm Haliburton (up $1.61 to $38.18, Charts, Fortune 500) also provided support to stocks in a session with no major economic reports on tap.
So far, the second quarter earnings season has gone rather well. To date, 129 companies - just over a quarter of the S&P 500 - have reported quarterly results, with 60 percent of those firms beating Wall Street projections, according to Thomson First Call.
Stocks retreated Friday, with the 30-stock Dow falling nearly 150 points amid continued fears about the housing market and some weak corporate results from Dow component Caterpillar (down $1.13 to $82.07, Charts, Fortune 500) and Web search giant Google (down $5.31 to $514.81, Charts, Fortune 500).
But last week's selloff and Monday's 100-point plus gain, has become commonplace in recent weeks as Wall Street has struggled with corporate earnings, the subprime mortgage sector and interest rates.
Todd Leone, head trader at Cowen & Co., suspected that the recent volatility would not dissapear anytime soon, or at least until Wall Street returns from "summer vacation" in September.
"Part of it is that 100 points isn't that big of a move anymore," he said. "I think the market is just trying to find a range to trade within."
In other corporate news, British bank Barclays (up $1.65 to $60.28, Charts) sweetened its takeover offer for ABN Amro (up $0.14 to $50.98, Charts) to $93 billion, although the new offer still falls short of the bid from a rival group led by Royal Bank of Scotland.
Computer maker Hewlett-Packard (up $0.12 to $48.66, Charts, Fortune 500) announced plans Monday to purchase Opsware Inc. (up $3.75 to $14.03, Charts) for $1.6 billion, in an effort to expand its business software holdings.
Netflix (down $2.18 to $17.45, Charts) shares tumbled 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 closing bell Monday.
Other earnings due after the bell include Dow component American Express (up $0.05 to $64.56, Charts, Fortune 500), as well as tech bellwether Texas Instruments (up $0.59 to $38.60, Charts, Fortune 500).
Oil prices fell sharply, as U.S. light crude for September lost 86 cents to $74.93 a barrel on the New York Mercantile Exchange.
Treasury prices edged lower, leaving the yield on the 10-year note at 4.96 percent, up slightly from 4.95 percent reached late Friday. Bond prices and yields move in opposite directions.
COMEX gold for August fell $3.20 to $681.50 an ounce.
Market breadth was positive. Advancers topped decliners by 6 to 5 on the New York Stock Exchange on volume of 1.08 billion shares. Winners barely beat losers on the Nasdaq on volume of 1.56 billion shares.