Stocks surge at the start
Report of possible investment in Merrill and Research in Motion results send major indexes sharply higher.
NEW YORK (CNNMoney.com) -- Stocks soared at the start of Friday's session as investors cheered impressive earnings from BlackBerry maker Research in Motion and reports that banking giant Merrill Lynch may sell a stake to a foreign state-owned investment fund.
The Dow Jones industrial average (INDU) gained about 1.1 percent in the opening minutes of trade.
Wall Street enjoyed a wave of good news coming into Friday's session as Research in Motion (RIMM) said late Thursday that it more than doubled its third-quarter results, helped by robust demand for its BlackBerry phones. Shares of the firm gained nearly 12 percent on the Nasdaq.
Financials were lifted by a report by The Wall Street Journal that Merrill Lynch (MER, Fortune 500), one of investment banks hardest hit by the credit crisis, is in talks to acquire a $5 billion investment from Singapore's state investment firm, Temasek Holdings.
Some dealmaking activity within the healthcare devices industry also provided encouragement as Philips (PHG) of the Netherlands said it has agreed to acquire Respironics (RESP), which specializes in ways to combat sleep disorders, for $5.1 billion.
Offsetting the positive sentiment was a wider-than-expected third-quarter loss from electronics retailer Circuit City (CC, Fortune 500), which blamed the dismal results on ongoing store reorganization and double-digit sales declines of gadgets like camcorders and DVD players. Shares of the retailer plunged 21 percent in morning trade.
On the economic front, personal income and spending for November came in higher than expected, while a key reading on inflation provided a mixed picture.
The core PCE reading, which strips out volatile food and energy costs and is favored by the Federal Reserve as a measure of inflation, rose 0.2 percent during the month, as expected. But for the year, core inflation is now running at 2.2 percent, higher than the 2 percent expected.
Investors will also likely keep an eye on a report on consumer sentiment due at 10 ET and the Fed, which is set to announce the results of its second auction of short term loans to banks.
Oil prices were higher, with U.S. light crude for February gained 74 cents to $91.80 a barrel on the New York Mercantile Exchange.