Dow in positive territory for December

NEW YORK (CNNMoney.com) -- Stocks rallied Monday, pushing the Dow back into positive territory for the month as investors cheered a combination of analyst upgrades and corporate deal-making.

The Dow Jones industrial average (INDU) gained 85 points, or 0.8%. The blue-chip average is now up 0.7% for December. The S&P 500 index (SPX) rose 11 points, or 1.1%.

The Nasdaq composite (COMP) advanced 26 points, or 1.2%, to its highest level since September 2008.

Aluminum producer Alcoa (AA, Fortune 500) surged nearly 9% after analysts at Morgan Stanley upgraded the stock and the company announced a $10.8 billion joint venture with Saudi Arabia to develop a major mining operation.

Technology stocks advanced after analysts at Barclays Capital upgraded Intel (INTC, Fortune 500) to "overweight." Shares of the semiconductor maker rose 2.4%.

Big health-care companies rose after the Senate voted to end debate on revisions to a major health-care-reform bill, a key step toward finalizing the controversial legislation.

The health care sector also was supported by news that Sanofi-Aventis will buy retail health products maker Chattem for $1.9 billion.

"Health care stocks had a nice rally," said Todd Leone, head trader at Cowen & Co. While questions remain about the sweeping health-care bill making its way through Congress, "people are happy that there's something concrete."

Cigna (CI, Fortune 500), Aetna (AET, Fortune 500), and UnitedHealth Group (UHG) all posted strong gains.

The rally comes at the beginning of a holiday-shortened week on Wall Street. The stock market closes early on Thursday and will remain dark on Friday for the Christmas holiday.

Many market participants will take the entire week off, which means the number of shares trading hands will be low, and relatively small moves could cause major volatility.

"With thin trading the risk always remains of a large move that seemingly comes out of nowhere and slams the market," noted Dan Cook, senior analyst at IG Markets, in a research report.

"This week could be a week where we see very quick, near-vertical up or down swings, followed by equally sudden reversals as profits are taken on a very short term basis," Cook said.

At the same time, with the major indexes on track to post double-digit percentage gains for the year, many money managers have closed their books. Those that are still trading will probably avoid risky bets.

"A lot of people have packed up their bags for the week and for the year," said Art Hogan, chief market strategist at Jefferies & Co. "I wouldn't read too much into any of the moves this week."

Tuesday brings the government's final revision of third-quarter gross domestic product and a report from National Association of Realtors on existing home sales in November.

Merger Monday. French pharmaceutical company Sanofi-Aventis (SNY) announced plans to acquire Chattanooga, Tenn.-based Chattem (CHTT), which makes over-the-counter healthcare products like Icy Hot, for $1.9 billion.

The deal, which would create the world's fifth-largest consumer healthcare company, is part of an ongoing plan to expand Sanofi's presence in the U.S. market, the company said in a statement.

Elsewhere, mining equipment maker Bucyrus (BUCY) International said Sunday it would buy rival Terex Corp. (TEX, Fortune 500) for $1.3 billion in cash.

Also on Sunday, Dutch automaker Spyker said it had made a new offer to General Motors for the Swedish car brand Saab. GM had announced on Friday that it would let the car brand die after failing to reach a deal with potential buyers, including Spyker and Swedish carmaker Koenigsegg.

Spyker said late Monday it would extend the 5 p.m. ET deadline on its offer until further notice. GM says it is considering the offer.

In other corporate news, Citadel Broadcasting Co., the nation's third-largest radio group, filed for Chapter 11 bankruptcy on Sunday. The company, which has stations in 25 states, listed liabilities of $2.5 billion on assets of $1.4 billion, according to court papers filed in the Southern District of New York.

Economy. No economic reports were released Monday.

World markets. European indexes closed sharply higher.

Currency and commodities. The dollar rose against major international rivals Monday.

Crude oil for January delivery fell 89 cents to settle at $72.47 a barrel.

Gold for February delivery fell $15.50 to settle at $1096.00 an ounce.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by about five to one on volume of 564 million shares. On the Nasdaq, advancers topped decliners by two to one on volume of 1.1 billion shares.