NEW YORK (CNNfn) - In a strong sign that the bull market is alive and well and that last summer's lengthy plunge was but a refreshing pause, the Dow industrials powered ahead to a record close Monday, buoyed by a resurgence in corporate mergers.
The Dow Jones industrial average rallied 214.72 points, or 2.34 percent, to 9,374.27, setting its first record high since closing at 9,337.97 on July 17. The blue-chip index, regaining all the ground lost since mid-July, has soared 22.8 percent just since Oct. 1.
On the New York Stock Exchange, advances outnumbered declines 1,849 to 1,225 as 772 million shares changed hands.
The Nasdaq Composite jumped 49.21, or 2.55 percent, to 1,977.42, and the S&P 500 index gained 24.66, or 2.12 percent, to 1,188.21.
An unexpected flurry of mergers spanning two continents and such varied industries as international banking, Web browsing and disability insurance, lifted investors' confidence in the health of corporate America and gave the biggest push in Monday's rally.
Marshall Acuff, equity strategist at Salomon Smith Barney, said he was not surprised with the market's climb back into record territory, given a friendly interest-rate environment, a sharp increase in merger activity and an apparent shift of focus away from corporate earnings performance. (300K WAV) or (300K AIFF)
The bond market ended lower, with stocks attracting most of the attention. The benchmark 30-year Treasury bond fell 20/32 of a point in price for a yield of 5.26 percent.
The dollar eased from its morning highs after soaring to its highest level against the German mark in 10 weeks. The gain came as tensions in the Persian Gulf mounted again and Russian President Boris Yeltsin was hospitalized with pneumonia.
Monday merger craze
Back in the stock market, news of mergers, completed or in the works, kept investors busy as the shares of companies taking part in the marriage action fired up.
"When you get these top-line blockbuster deals, they will guarantee that we will have future deals coming as a result of this, and so I'm telling you the landscape will change as a result of this," said Robert Froehlich, market analyst at Scudder Kemper Investments.
At the top of the deal talk, shares of two premier Internet companies surged on news they were close to joining forces. America Online (AOL), the world's largest online service provider, soared 4-3/8 to 89-1/4, and Netscape (NSCP), the browser maker cum Web portal, rallied 2-3/4 to 41-15/16 on news the two are negotiating Netscape's acquisition by AOL in a stock swap worth about $4 billion. Shares of Sun Microsystems (SUNW), also said to be involved in the deal, rose 3-13/16 to 71-5/16.
Meanwhile, shares of Bankers Trust (BT) soared 7 to 84-1/4, following news German giant Deutsche Bank (FDBK) is about to buy the U.S. financial powerhouse in a $9.7 billion deal that could be announced imminently.
The news spurred shares of other financial companies that had been the target of takeover speculation at one time or another. Dow component J.P. Morgan (JPM) rallied 6-1/4 to 115-7/8 and Lehman Brothers (LEH) climbed 8-13/16, or more than 19 percent, to 54-1/2.
Shares of Amerin (AMRN) surged 2-11/16, or nearly 13 percent, to 23-9/16 on news the company is joining forces with CMAC Investment (CMT) in a deal that will create the nation's second-largest mortgage insurer. CMAT's stock gained 1-15/16 to 45-7/8.
Elsewhere, AMP (AMP) climbed 3 to 48-1/8 after Tyco International (TYC) agreed to buy the company for $11.3 billion in stock. Tyco's shares advanced 3/8 to 65-7/16.
Finally, shares of Provident Cos. (PVT) gained 4-1/8, or more than 12 percent, to 37-1/2 and Unum (UNM) rallied 4-1/2 to 52-5/8 on news the two disability insurers have agreed to unite in a stock-swap transaction.
(Click here for a look at today's CNNfn market movers)
-- by staff writer Malina Poshtova Zang