Strong start for stocks

NEW YORK (CNNMoney.com) -- Stocks got off to a higher start Monday, helped by some surprisingly strong earnings from Dow component Merck and some dealmaking activity.

The Dow Jones industrial average (down 149.33 to 13,851.08, Charts) climbed over 0.5 percent in early trading.

The broader S&P 500 (up 8.14 to 1,542.24, Charts) moved 0.5 percent higher, while the tech-fueled Nasdaq (up 11.92 to 2,699.52, Charts) rose nearly 0.3 percent.

Better than expected earnings from drugmakers Merck (up $0.00 to $49.02, Charts, Fortune 500) and Schering-Plough (up $0.00 to $31.49, Charts, Fortune 500) and toymaker Hasbro (up $0.00 to $32.56, Charts) helped send markets higher, in a session with no major economic reports on tap.

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 major corporate news, offshore drilling firms Transocean (up $0.00 to $109.97, Charts) and rival GlobalSantaFe (up $0.00 to $74.74, Charts) announced early Monday they agreed to a merger that would give the companies a combined market capitalization of about $48 billion.

Private equity firm Cerberus Capital Management announced a $4 billion deal for the equipment rental company United Rental (up $0.00 to $32.37, Charts), representing a 6.6 percent premium to the company's Friday closing price.

British bank Barclays (up $0.00 to $58.63, Charts) sweetened its takeover offer for ABN Amro (up $0.00 to $50.84, Charts) to $93 billion, although the new offer still falls short of the bid from a rival group led by Royal Bank of Scotland.

Oil prices fell sharply, as U.S. light crude for September lost 90 cents to $74.89 a barrel on the New York Mercantile Exchange.

Treasury prices gained, leaving the yield on the 10-year note at 4.96 percent, up from 4.95 percent level reached late Friday.

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.